<PAGE>
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF
THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
(AMENDMENT NO. 3)
UNDER
THE SECURITIES EXCHANGE ACT OF 1934
---------------
MERIDIAN POINT REALTY TRUST VIII CO.
(NAME OF SUBJECT COMPANY)
---------------
EASTGROUP PROPERTIES, INC.
EASTGROUP-MERIDIAN, INC.
(BIDDERS)
---------------
COMMON SHARES, $0.001 PAR VALUE PER SHARE
PREFERRED SHARES, $0.001 PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
---------------
589954-10-6
589954-20-5
(CUSIP NUMBERS OF CLASSES OF SECURITIES)
---------------
DAVID H. HOSTER II
EASTGROUP-MERIDIAN, INC.
C/O EASTGROUP PROPERTIES, INC.
300 ONE JACKSON PLACE
188 EAST CAPITOL STREET
JACKSON, MISSISSIPPI 39201-2195
(601) 354-3555
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
---------------
COPIES TO:
JOSEPH P. KUBAREK, ESQ.
JAECKLE FLEISCHMANN & MUGEL, LLP
800 FLEET BANK BUILDING
TWELVE FOUNTAIN PLAZA
BUFFALO, NEW YORK 14202
(716) 856-0600
---------------
FEBRUARY 18, 1998
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
CALCULATION OF FILING FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
$52,578,175 $10,515.64
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
* For purposes of calculating amount of filing fee only. The amount assumes
the purchase of 1,709,937 Common Shares, $0.001 par value per share, at a
price per Common Share of $8.50 in cash, and the purchase of 3,804,371
Preferred Shares, $0.001 par value per share, at a price per Preferred
Share of $10.00 in cash.
[_]Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
PAGE 1 OF 230 PAGES
EXHIBIT INDEX ON PAGE 5
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- -------------------------------------------------------------------------------
<PAGE>
14D-1 & 13D/A
CUSIP NO. PAGE 2 OF 6 PAGES
589954-20-5
<TABLE>
<C> <S> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
EastGroup Properties, Inc.
- -------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) [_]
(B) [_]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(e) or 2(f) [_]
- -------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
- -------------------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,469,556 Preferred Shares
- -------------------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES
CERTAIN SHARES* [_]
- -------------------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
27.9%
- -------------------------------------------------------------------------------
10 TYPE OF REPORTING PERSON*
CO
</TABLE>
* SEE INSTRUCTIONS BEFORE FILLING OUT
2
<PAGE>
This Tender Offer Statement on Schedule 14D-1 also constitutes an amendment
to the Statement on Schedule 13D with respect to the acquisition by EastGroup-
Meridian, Inc. (the "Purchaser") and EastGroup Properties, Inc. ("EastGroup")
of beneficial ownership of the common shares, par value $0.001 per share (the
"Common Shares") and preferred shares, par value $0.001 per share (the
"Preferred Shares") (collectively, the Common Shares and Preferred Shares are
referred to herein as "Shares") pursuant to the Offer (as defined below). The
item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY
(a) The name of the subject company is Meridian Point Realty Trust VIII Co.,
a Missouri corporation (the "Company"), which has its principal executive
offices at 655 Montgomery Street, Suite 800, San Francisco, California 94111.
(b) This Schedule 14D-1 relates to the offer by the Purchaser to purchase
all outstanding Shares of the Company at a price of $8.50 per Common Share,
net to the seller in cash (the "Common Share Offer Price"), and $10.00 per
Preferred Share, net to the seller in cash (the "Preferred Share Offer
Price"), upon the terms and subject to the conditions set forth in the Offer
to Purchase and in the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Offer"),
copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively. Information concerning the number of outstanding Shares is set
forth in the "Introduction" to the Offer to Purchase and is incorporated
herein by reference.
(c) Information concerning the principal market in which the Shares are
traded and the high and low sales prices of the Shares for each quarterly
period during the past two years is set forth in Section 6 ("Price Range of
the Shares; Dividends") of the Offer to Purchase and is incorporated herein by
reference.
ITEM 2. IDENTITY AND BACKGROUND
(a)-(d) and (g) This Schedule 14D-1 is being filed by the Purchaser, a
Missouri corporation, and EastGroup, a Maryland corporation. The Purchaser is
a wholly-owned subsidiary of EastGroup. Information concerning the principal
business and the address of the principal offices of EastGroup and the
Purchaser is set forth in Section 9 ("Certain Information Concerning EastGroup
and the Purchaser") of the Offer to Purchase and is incorporated herein by
reference. The names, business addresses, present principal occupations or
employment, material occupations, positions, offices or employment during the
last five years and citizenship of the directors and executive officers of
EastGroup and the Purchaser are set forth in Annex I ("Certain Information
Concerning the Directors and Executive Officers of EastGroup Properties,
Inc.") and Annex II ("Certain Information Concerning the Directors and
Executive Officers of the Purchaser"), respectively, to the Offer to Purchase
and are incorporated herein by reference.
(e) and (f) The information set forth in Section 9 ("Certain Information
Concerning EastGroup and the Purchaser"), Section 16 ("Certain Legal
Matters"), Annex I ("Certain Information Concerning the Directors and
Executive Officers of EastGroup Properties, Inc.") and Annex II ("Certain
Information Concerning the Directors and Executive Officers of the Purchaser")
of the Offer to Purchase is incorporated herein by reference.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY
(a) None.
(b) The information set forth in Section 11 ("Contacts with the Company;
Background of the Offer"), Section 12 ("Purpose of the Offer; Short Form
Merger; Plans for the Company; Dissenters' Rights; Going Private
Transactions") and Section 13 ("The Merger Agreement") of the Offer to
Purchase is incorporated herein by reference.
3
<PAGE>
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
(a) and (b) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER
(a)-(e) The information set forth in Section 12 ("Purpose of the Offer;
Short Form Merger; Plans for the Company; Dissenters' Rights; Going Private
Transactions") and Section 13 ("The Merger Agreement") of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the Offer on
the Market for Shares; Stock Quotations; and Registration Under the Exchange
Act") of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY
(a) and (b) The information set forth in "Introduction," Section 11
("Contacts with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; Short Form Merger; Plans for the Company; Dissenters'
Rights; Going Private Transactions") of the Offer to Purchase is incorporated
herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES
The information set forth in "Introduction," Section 11 ("Contacts with the
Company; Background of the Offer"), Section 12 ("Purpose of the Offer; Short
Form Merger; Plans for the Company; Dissenters' Rights; Going Private
Transactions") and Section 13 ("The Merger Agreement") of the Offer to
Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The information set forth in "Introduction" and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS
The information set forth in Section 9 ("Certain Information Concerning
EastGroup and the Purchaser") of the Offer to Purchase is incorporated herein
by reference and EastGroup's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 and EastGroup's Quarterly Report on Form 10-Q for the
period ended September 30, 1997 are also incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION
(a) The information set forth in Section 11 ("Contacts with the Company;
Background of the Offer") and Section 12 ("Purpose of the Offer; Short Form
Merger; Plans for the Company; Dissenters' Rights; Going Private
Transactions") of the Offer to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 16 ("Certain Legal
Matters") of the Offer to Purchase is incorporated herein by reference.
(d) Not applicable.
(e) None.
4
<PAGE>
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of February 18, 1998
among EastGroup, the Purchaser and the Company, EastGroup's Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, EastGroup's Quarterly
Report on Form 10-Q for the nine months ended September 30, 1997, the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996, and the Company's Quarterly Report on Form 10-Q for the period ended
September 30, 1997 are incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS*
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Letter to Brokers, Dealers, Banks, Trust Companies and Other
Nominees.
(a)(4) Letter to Clients for use by Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a)(5) Notice of Guaranteed Delivery.
(a)(6) Press Release dated February 18, 1998.
(a)(7) Form of Summary Advertisement dated February 23, 1998.
(a)(8) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(b)(1) 1997 Amended and Restated Promissory Note dated as of October 1,
1997.
(b)(2) First Amended and Restated Loan Agreement dated as of June 29, 1994.
(b)(3) First Amendment to First Amended and Restated Loan Agreement dated
as of October 31, 1994.
(b)(4) Second Amendment to First Amended and Restated Loan Agreement and
First Amendment to First Amended and Restated Promissory Note dated
as of July 12, 1995.
(b)(5) Third Amendment to First Amended and Restated Loan Agreement and
Second Amendment to First Amended and Restated Promissory Note dated
as of June 1, 1996.
(b)(6) Fourth Amendment to First Amended and Restated Loan Agreement dated
as of March 27, 1997.
(b)(7) Fifth Amendment to First Amended and Restated Loan Agreement dated
as of June 20, 1997.
(b)(8) Sixth Amendment to First Amended and Restated Loan Agreement and
Third Amendment to First Amended and Restated Promissory Note dated
October 1, 1997.
(c)(1) Agreement and Plan of Merger dated as of February 18, 1998, among
EastGroup, the Purchaser and the Company.
(c)(2) Confidentiality Agreement dated as of February 10, 1998, between
EastGroup and the Company.
(c)(3) Dealer Manager Agreement dated as of February 19, 1998, between
EastGroup, the Purchaser and PaineWebber Incorporated.
(d) None.
(e) Not applicable.
(f) None.
- --------
* EastGroup and the Purchaser hereby undertake to provide the Securities and
Exchange Commission, upon request, with any omitted schedule or exhibit to any
of the documents filed herewith as Exhibits.
5
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: February 23, 1998 EastGroup Properties, Inc.
By: /s/ N. Keith McKey
----------------------------------
Name:N. Keith McKey
Title:Executive Vice President
EastGroup-Meridian, Inc.
By: /s/ N. Keith McKey
----------------------------------
Name:N. Keith McKey
Title:Vice President
6
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES AND PREFERRED SHARES
OF
MERIDIAN POINT REALTY TRUST VIII CO.
AT
$8.50 NET PER COMMON SHARE
AND
$10.00 NET PER PREFERRED SHARE
BY
EASTGROUP-MERIDIAN, INC.
A WHOLLY-OWNED SUBSIDIARY
OF
EASTGROUP PROPERTIES, INC.
- -------------------------------------------------------------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON FRIDAY, MARCH 20, 1998, UNLESS THE OFFER IS EXTENDED.
- -------------------------------------------------------------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
COMMON SHARES AND PREFERRED SHARES (BOTH AS HEREINAFTER DEFINED) THAT, WHEN
ADDED TO THE PREFERRED SHARES BENEFICIALLY OWNED BY EASTGROUP PROPERTIES, INC.
ON THE DATE OF THE MERGER AGREEMENT (AS HEREINAFTER DEFINED), WILL CONSTITUTE
TWO-THIRDS OF THE TOTAL NUMBER OF SHARES OF THE CAPITAL STOCK OF MERIDIAN
POINT REALTY TRUST VIII CO. (THE "COMPANY") ENTITLED TO VOTE ON A MERGER UNDER
THE COMPANY'S CERTIFICATE OF INCORPORATION, AS AMENDED (THE "CHARTER"), AND
THE MISSOURI GENERAL AND BUSINESS CORPORATION LAW ("GBCL").
THE BOARD OF TRUSTEES OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
SHAREHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
----------------
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
shares should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal, mail or deliver it and any other required documents to the
depositary and either deliver the certificate(s) for such tendered shares to
the depositary along with the Letter of Transmittal or tender such shares
pursuant to the procedures for book-entry transfer set forth in Section 2 of
this offer to purchase, or (2) request such shareholder's broker, dealer,
commercial bank, trust company or other nominee to effect the transaction for
the shareholder. Shareholders having shares registered in the name of a
broker, dealer, commercial bank, trust company or other nominee must contact
such broker, dealer, commercial bank, trust company or other nominee if they
desire to tender such shares.
A shareholder who desires to tender shares and whose certificate(s) for
shares are not immediately available, or who cannot comply with the procedures
for book-entry transfer on a timely basis, may tender such shares by following
the procedures for guaranteed delivery set forth in Section 2 of this Offer to
Purchase.
Questions and requests for assistance may be directed to the information
agent at its address and telephone number set forth on the back cover of this
Offer to Purchase. Requests for additional copies of this Offer to Purchase,
the Letter of Transmittal and the Notice of Guaranteed Delivery may be
directed to the information agent or to brokers, dealers, commercial banks or
trust companies.
----------------
THE DEALER MANAGER FOR THE OFFER IS:
PAINEWEBBER INCORPORATED
February 23, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<C> <C> <S> <C>
INTRODUCTION.......................................................... 1
THE TENDER OFFER...................................................... 2
1. TERMS OF THE OFFER; EXTENSION OF TENDER PERIOD; TERMI-
NATION; AMENDMENTS.................................... 2
2. PROCEDURE FOR TENDERING SHARES........................ 4
3. WITHDRAWAL RIGHTS..................................... 6
4. ACCEPTANCE FOR PAYMENT AND PAYMENT OF OFFER PRICE..... 7
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES............... 8
6. PRICE RANGE OF SHARES; DIVIDENDS...................... 9
7. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; STOCK
QUOTATIONS; REGISTRATION UNDER THE EXCHANGE ACT....... 9
8. CERTAIN INFORMATION CONCERNING THE COMPANY............ 10
9. CERTAIN INFORMATION CONCERNING EASTGROUP AND THE
PURCHASER............................................. 13
10. SOURCE AND AMOUNT OF FUNDS............................ 15
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER.... 15
12. PURPOSE OF THE OFFER; SHORT FORM MERGER; PLANS FOR THE
COMPANY; DISSENTERS' RIGHTS; GOING PRIVATE
TRANSACTIONS.......................................... 21
13. THE MERGER AGREEMENT.................................. 22
14. DIVIDENDS AND DISTRIBUTIONS........................... 29
15. CERTAIN CONDITIONS OF THE OFFER....................... 29
16. CERTAIN LEGAL MATTERS................................. 31
17. FEES AND EXPENSES..................................... 32
18. MISCELLANEOUS......................................... 33
Annex I Certain Information Concerning the Directors and Executive
Officers of EastGroup Properties, Inc....................... I-1
Annex II Certain Information Concerning the Directors and Executive
Officers of EastGroup-Meridian, Inc......................... II-1
Annex III Recent Transactions in Shares............................... III-1
</TABLE>
i
<PAGE>
TO THE HOLDERS OF COMMON SHARES AND PREFERRED SHARES OF MERIDIAN POINT REALTY
TRUST VIII CO.
INTRODUCTION
EastGroup-Meridian, Inc., a Missouri corporation (the "Purchaser") and a
wholly-owned subsidiary of EastGroup Properties, Inc., a Maryland corporation
("EastGroup"), hereby offers to purchase all outstanding common shares, par
value $0.001 per share (the "Common Shares"), and all outstanding preferred
shares, par value $0.001 per share (the "Preferred Shares") (collectively the
Common Shares and the Preferred Shares are referred to herein as the
"Shares"), of Meridian Point Realty Trust VIII Co., a Missouri corporation
(the "Company"), at a price per Common Share of $8.50 net to the seller in
cash (the "Common Share Offer Price"), and at a price per Preferred Share of
$10.00 net to the seller in cash (the "Preferred Share Offer Price"), both
upon the terms and subject to the conditions set forth in this Offer to
Purchase and in the related Letter of Transmittal (which together constitute
the "Offer").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the purchase of Shares by the Purchaser pursuant to the
Offer. However, any tendering shareholder or other payee who fails to complete
and sign the Substitute Form W-9 that is included in the Letter of Transmittal
may be subject to a required backup federal income tax withholding of 31% of
the gross proceeds payable to such shareholder or other payee pursuant to the
Offer. See Section 2. The Purchaser will pay all charges and expenses of
Beacon Hill Partners, Inc., as Information Agent (the "Information Agent"),
Harris Trust Company of New York, as Depositary (the "Depositary"), and
PaineWebber Incorporated ("PaineWebber") as the Dealer Manager (the "Dealer
Manager"), incurred in connection with the Offer. See Section 17.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
COMMON SHARES AND PREFERRED SHARES THAT, WHEN ADDED TO THE PREFERRED SHARES
BENEFICIALLY OWNED BY EASTGROUP ON THE DATE OF THE MERGER AGREEMENT (AS
DEFINED BELOW), WILL CONSTITUTE TWO-THIRDS OF THE TOTAL NUMBER OF SHARES OF
THE CAPITAL STOCK OF THE COMPANY ENTITLED TO VOTE ON A MERGER UNDER THE
COMPANY'S CERTIFICATE OF INCORPORATION, AS AMENDED (THE "CHARTER") AND THE
GBCL (AS DEFINED BELOW). THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER TERMS AND
CONDITIONS SET FORTH IN SECTION 15.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of February 18, 1998 (the "Merger Agreement"), among EastGroup, the
Purchaser and the Company. The Merger Agreement provides, among other things,
that upon the terms and subject to the conditions therein, as soon as
practicable after the consummation of the Offer, the Purchaser will be merged
with and into the Company (the "Merger"), with the Company being the
corporation surviving the Merger (the "Surviving Corporation"). At the
effective time of the Merger (the "Effective Time"), each outstanding Share
(other than Shares with respect to which appraisal rights are properly
exercised ("Dissenting Shares") under the Missouri General and Business
Corporation Law (the "GBCL")) not held in the treasury of the Company or owned
by any subsidiary of the Company, EastGroup or the Purchaser, will be
converted into and represent the right to receive in cash, without interest,
the price per Common Share or Preferred Share, as appropriate, paid pursuant
to the Offer. The Merger Agreement and its terms are further described in
Section 13.
THE BOARD OF TRUSTEES OF THE COMPANY HAS DETERMINED THAT THE OFFER AND THE
MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
SHAREHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
<PAGE>
Prudential Securities Incorporated, the Company's financial advisor
("Prudential"), has delivered to the Company's Board of Trustees its written
opinion that the consideration to be received by the shareholders of the
Company pursuant to the Offer and the Merger is fair to such shareholders from
a financial point of view. A copy of such opinion is contained in the
Company's Solicitation/Recommendation Statement on Schedule 14D-9 which is
being distributed to the Company's shareholders herewith.
The Company has informed the Purchaser that as of February 20, 1998 there
were 1,709,937 Common Shares outstanding and 5,273,927 Preferred Shares
outstanding. As of the date hereof, EastGroup beneficially owns 1,469,556
Preferred Shares (27.9% of the outstanding Preferred Shares and 21.0% of all
outstanding Shares). Based on such number of outstanding Shares, if the
Purchaser acquires at least 3,186,354 Shares as a result of the Offer,
EastGroup will beneficially own two-thirds of the outstanding Shares. In such
event, EastGroup would have sufficient voting power to approve the Merger
without the affirmative vote of any other shareholder. If EastGroup
beneficially owns 90% or more of the outstanding Common Shares and 90% or more
of the outstanding Preferred Shares, the Merger could be effected pursuant to
the short form merger provisions of the GBCL, without the action of any
shareholder of the Company other than EastGroup. The Company has granted the
Purchaser options to acquire sufficient Shares so that, under certain
circumstances, the Purchaser may increase its percentage ownership of Common
Shares and/or Preferred Shares to the 90% level. See Section 13.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXTENSION OF TENDER PERIOD; TERMINATION;
AMENDMENTS. Upon the terms and subject to the conditions of the Offer
(including, if the Offer is extended or amended, the terms and conditions of
any such extension or amendment), the Purchaser will accept for payment and
pay for all Shares which are validly tendered on or prior to the Expiration
Date (as hereinafter defined) and not theretofore withdrawn as permitted by
Section 3. The term "Expiration Date" means 12:00 Midnight, New York City
time, on Friday, March 20, 1998, unless and until the Purchaser (subject to
the terms and conditions of the Merger Agreement) shall have extended the
period of time for which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as
so extended by the Purchaser, shall expire.
The Offer is conditioned upon, among other things, the satisfaction of the
Minimum Condition (as defined in Section 15). Subject to the provisions of the
Merger Agreement, the Purchaser reserves the right (but shall not be
obligated) to waive or reduce the Minimum Condition or to waive any or all of
the other conditions of the Offer. If, by 12:00 Midnight, New York City time,
on Friday, March 20, 1998, or any subsequent Expiration Date, any or all of
such conditions have not been satisfied or waived, subject to the provisions
of the Merger Agreement, the Purchaser may elect to (i) terminate the Offer
and return all tendered Shares to tendering shareholders; (ii) waive all of
the unsatisfied conditions and, subject to any required extension, purchase
all Shares validly tendered by the Expiration Date and not withdrawn; (iii)
extend the Offer and, subject to the right of shareholders to withdraw Shares
until the Expiration Date, retain the Shares that have been tendered until the
expiration of the Offer as extended; or (iv) delay acceptance for payment of,
or payment for, the Shares, subject to complying with applicable law, until
the satisfaction or waiver of the conditions of the Offer.
Under the terms of the Merger Agreement, the Purchaser may not (except as
described in the next sentence), without the prior written consent of the
Company, (i) reduce the number of Common Shares and Preferred Shares to be
purchased in the Offer; (ii) reduce the Common Share Offer Price or the
Preferred Share Offer Price except as otherwise provided by the Merger
Agreement; (iii) modify or add any conditions to the Offer in any manner that
the Board of Trustees of the Company, in the exercise of its fiduciary
obligations, determines to be adverse to the holders of Common Shares or
Preferred Shares; (iv) extend the Offer other than as provided in the Merger
Agreement; (v) change the form of consideration payable in the Offer; or (vi)
amend any other term of the Offer in a manner that the Board of Trustees of
the Company, in the exercise of its fiduciary obligations, determines to
2
<PAGE>
be adverse to the holders of Common Shares or Preferred Shares.
Notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (i) extend the Offer beyond the Expiration Date for a period not to
exceed 20 business days, if at the Expiration Date any of the conditions to
the Purchaser's obligation to accept for payment, and pay for, Common Shares
and Preferred Shares shall not be satisfied or waived, until such time as such
conditions are satisfied or waived; or (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "Commission") or the staff thereof applicable to
the Offer.
Subject to the applicable regulations of the Commission and the provisions
of the Merger Agreement, the Purchaser also expressly reserves the right, in
its sole discretion, at any time or from time to time, to (i) delay acceptance
for payment of or, regardless of whether such Shares were theretofore accepted
for payment, payment for any Shares; (ii) terminate the Offer (whether or not
any Shares have theretofore been accepted for payment) if any of the
conditions referred to in Section 15 have not been satisfied or upon the
occurrence of any of the events specified in Section 15; and (iii) waive any
condition or otherwise amend the Offer in any respect, in each case by giving
oral or written notice of such delay, termination, waiver or amendment to the
Depositary and by making a public announcement thereof. If the Purchaser
accepts for payment any Shares pursuant to the terms of the Offer, it will
accept for payment all Shares validly tendered prior to the Expiration Date
and not withdrawn and, subject to clause (i) above, will promptly pay for all
Shares so accepted for payment. The Purchaser acknowledges that its
reservation of the right to delay payment for Shares that it has accepted for
payment is limited by Rule 14e-l(c) under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), which requires the Purchaser to pay the
consideration offered or return the Shares tendered promptly after the
termination or withdrawal of the Offer.
The rights reserved by the Purchaser in the preceding paragraph are in
addition to the Purchaser's rights pursuant to Section 15. Any extension,
delay, termination or amendment of the Offer will be followed as promptly as
practicable by public announcement thereof, such announcement in the case of
an extension to be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date, in
accordance with the public announcement requirements of Rule 14e-1(d) under
the Exchange Act. Subject to applicable law (including Rules 14d-4(c) and 14d-
6(d) under the Exchange Act, which require that any material change in the
information published, sent or given to shareholders in connection with the
Offer be promptly disseminated to shareholders in a manner reasonably designed
to inform shareholders of such change), and without limiting the manner in
which the Purchaser may choose to make any public announcement, the Purchaser
shall have no obligation to publish, advertise or otherwise communicate any
such public announcement other than by making a release to the PRNewswire.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer (including the Minimum Condition), the Purchaser will disseminate
additional tender offer materials (including by public announcement as set
forth above) and extend the Offer to the extent required by Rules 14d-4(c),
14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an
offer must remain open following material changes in the terms of the Offer,
other than a change in price, percentage of securities sought or inclusion of
or change to a dealer's soliciting fee, will depend upon the facts and
circumstances, including the materiality, of the changes. In the Commission's
view, an offer should remain open for a minimum of five business days from the
date the material change is first published, sent or given to shareholders,
and, if material changes are made with respect to information that approaches
the significance of price and share levels, a minimum of ten business days may
be required to allow for adequate dissemination and investor response. With
respect to a change in price or, subject to certain limitations, a change in
the percentage of securities sought or inclusion of or change to a dealer's
soliciting fee, a minimum ten business day period from the date of such change
is generally required to allow for adequate dissemination to shareholders.
Accordingly, if, prior to the Expiration Date, the Purchaser decreases the
number of Shares being sought or increases or decreases the consideration
offered pursuant to the Offer, and if the Offer is scheduled to expire at any
time earlier than the period ending on the tenth business day from the date
that notice of such increase or decrease is first published, sent or given to
holders of Shares, the Offer will be
3
<PAGE>
extended at least until the expiration of such ten business day period. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or a federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
In connection with the Offer, the Company has provided or will provide the
Purchaser with the names and addresses of all record holders of Shares and
security position listings of Shares held in stock depositories. This Offer to
Purchase, the related Letter of Transmittal and other relevant materials will
be mailed to registered holders of Shares and will be furnished to brokers,
dealers, commercial banks, trust companies and similar persons whose names, or
the names of whose nominees, appear on the shareholder list or, if applicable,
who are listed as participants in a clearing agency's security position
listing, for subsequent transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES. Except as set forth below, in order for
Shares to be validly tendered pursuant to the Offer, the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, together with
any required signature guarantees, or an Agent's Message (as hereinafter
defined) in connection with a book-entry transfer of Shares, and any other
documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase on or prior to the Expiration Date, and either (i) certificates
representing tendered Shares must be received by the Depositary, or such
Shares must be tendered pursuant to the procedure for book-entry transfer set
forth below (and confirmation of receipt of such delivery must be received by
the Depositary), in each case on or prior to the Expiration Date; or (ii) the
guaranteed delivery procedures set forth below must be complied with. No
alternative, conditional or contingent tenders will be accepted.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (i) if such Letter of Transmittal is signed by the registered
holder of the Shares tendered therewith, unless such holder has completed
either the box entitled "Special Delivery Instructions" or the box entitled
"Special Payment Instructions" in the Letter of Transmittal; or (ii) if Shares
are tendered for the account of a firm that is a member in good standing of
the Security Transfer Agent's Medallion Program, the New York Stock Exchange
Medallion Signature Program or the Stock Exchange Medallion Program (each
being hereinafter referred to as an "Eligible Institution"). See Instruction 1
of the Letter of Transmittal.
If a certificate representing Shares is registered in the name of a person
other than the signer of the Letter of Transmittal (or a facsimile thereof),
or if payment is to be made, or Shares not accepted for payment or not
tendered are to be returned to a person other than the registered holder, the
certificate must be endorsed or accompanied by an appropriate stock power, in
either case signed exactly as the name(s) of the registered holder(s) appears
on the certificate, with the signature(s) on the certificate or stock power
guaranteed by an Eligible Institution. If the Letter of Transmittal or stock
powers are signed or any certificate is endorsed by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of corporations or
others acting in a fiduciary or representative capacity, such persons should
so indicate when signing and, unless waived by the Purchaser, proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
See Instruction 5 of the Letter of Transmittal.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after the date
of this Offer to Purchase, and any financial institution that is a participant
in the Book-Entry Transfer Facility's system may make book-entry delivery of
the Shares by causing the Book-Entry Transfer Facility to transfer such Shares
into the Depositary's account in accordance with the Book-Entry Transfer
Facility's procedure for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer
Facility, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), with any required signature guarantees, or an Agent's
Message and any other required documents, must, in any case, be transmitted to
and received by the Depositary at one of its addresses set forth on the back
cover
4
<PAGE>
of this Offer to Purchase prior to the Expiration Date, or the guaranteed
delivery procedures described below must be complied with. The term "Agent's
Message" means a message transmitted through electronic means by the Book-
Entry Transfer Facility to, and received by, the Depositary and forming a part
of a book-entry confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares that such participant has
received, and agrees to be bound by, the terms of the Letter of Transmittal.
Delivery of documents to the Book-Entry Transfer Facility in accordance with
the Book-Entry Transfer Facility's procedures does not constitute delivery to
the Depositary.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's certificates representing Shares are not
immediately available (or the procedures for book-entry transfer cannot be
completed on a timely basis) or time will not permit all required documents to
reach the Depositary prior to the Expiration Date, such Shares may
nevertheless be tendered, provided that all of the following conditions are
satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) the Depositary receives, prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form provided by the Purchaser; and
(iii) the certificates representing all tendered Shares in proper form
for transfer (or confirmation of a book-entry transfer of such Shares into
the Depositary's account at the Book-Entry Transfer Facility), together
with a properly completed and duly executed Letter of Transmittal (or
facsimile hereof) with any required signature guarantees (or, in connection
with a book-entry transfer, an Agent's Message) and any other documents
required by the Letter of Transmittal are received by the Depositary within
three Trading Days after the date of such Notice of Guaranteed Delivery. A
"Trading Day" is any day on which the New York Stock Exchange, Inc.
("NYSE") is open for trading.
The Notice of Guaranteed Delivery may be delivered by hand, or may be
transmitted by telegram, telex, facsimile transmission or mail, to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates representing such Shares (or timely confirmation of a book-entry
transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility); (ii) properly completed and duly executed Letter(s) of
Transmittal (or facsimile(s) thereof), together with any required signature
guarantees (or, in connection with a book-entry transfer, an Agent's Message);
and (iii) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates representing Shares or confirmations of book-entry
transfers of such Shares are actually received by the Depositary.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR SHARES,
IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL
BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Determination of Validity. All questions as to the form of documents and the
validity, eligibility (including time of receipt) and acceptance for payment
of any tendered Shares will be determined by the Purchaser in its sole
discretion, and its determination shall be final and binding on all parties.
The Purchaser reserves the absolute right to reject any or all tenders of any
Shares that it determines are not in appropriate form or the acceptance for
payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any of the conditions of the Offer or any defect or irregularity in any
5
<PAGE>
tender with respect to any particular Shares or any particular shareholder,
and the Purchaser's interpretation of the terms and conditions of the Offer
(including the Letter of Transmittal and the Instructions thereto) will be
final and binding on all parties. No tender of Shares will be deemed to have
been validly made until all defects or irregularities relating thereto have
been expressly waived or cured to the satisfaction of the Purchaser. None of
the Purchaser, EastGroup, the Depositary, the Information Agent, the Dealer
Manager or any other person will be under any duty to give notification of any
defects or irregularities in tenders, nor shall any of them incur any
liability for failure to give any such notification.
Other Requirements. By executing the Letter of Transmittal, a tendering
shareholder irrevocably appoints designees of the Purchaser as such
shareholder's proxies, in the manner set forth in the Letter of Transmittal,
each with full power of substitution, to the full extent of such shareholder's
rights with respect to the Shares tendered by such shareholder and accepted
for payment by the Purchaser (and any and all other Shares or other securities
or rights issued, issuable, which detach from or become exercisable in respect
of such Shares on or after February 23, 1998), effective if, when and to the
extent that the Purchaser accepts such Shares for payment pursuant to the
Offer. Upon such acceptance for payment, all prior proxies given by such
shareholder with respect to such Shares or other securities accepted for
payment will, without further action, be revoked, and no subsequent proxies
may be given by such shareholder nor any subsequent written consents executed
(and, if given or executed, will not be deemed effective). Such designees of
the Purchaser will, with respect to such Shares and other securities or rights
issuable in respect thereof, be empowered to exercise all voting and other
rights of such shareholder as they, in their sole discretion, may deem proper
in respect of any annual, special or adjourned meeting of the Company's
shareholders, action by written consent in lieu of any such meeting or
otherwise. The Purchaser reserves the right to require that, in order for
Shares to be deemed validly tendered, immediately upon the Purchaser's
acceptance for payment of such Shares the Purchaser must be able to exercise
full voting rights with respect to such Shares.
The Purchaser's acceptance for payment of Shares tendered pursuant to any of
the procedures described above will constitute a binding agreement between the
tendering shareholder and the Purchaser upon the terms and subject to the
conditions of the Offer. Purchaser shall have no rights as a shareholder of
tendered Shares until such time as the Purchaser accepts tendered Shares for
payment. Any dividend paid by the Company with a record date prior to the date
on which the Purchaser accepts Shares for payment (which can be no earlier
than the Expiration Date) shall be payable to the tendering shareholder.
TO PREVENT BACKUP WITHHOLDING OF FEDERAL INCOME TAX ON PAYMENTS MADE TO
SHAREHOLDERS WITH RESPECT TO SHARES PURCHASED PURSUANT TO THE OFFER, EACH
SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH HIS OR HER CORRECT TAXPAYER
IDENTIFICATION NUMBER ("TIN") AND CERTIFY THAT HE OR SHE IS NOT SUBJECT TO
BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY COMPLETING THE SUBSTITUTE FORM W-9
INCLUDED IN THE LETTER OF TRANSMITTAL. FOREIGN HOLDERS MUST SUBMIT A COMPLETED
FORM W-8 TO AVOID BACKUP WITHHOLDING. THIS FORM MAY BE OBTAINED FROM THE
DEPOSITARY. SEE INSTRUCTIONS 10 AND 11 OF THE LETTER OF TRANSMITTAL.
3. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer will be
irrevocable, except that Shares tendered may be withdrawn at any time prior to
the Expiration Date, and, unless theretofore accepted for payment by the
Purchaser as provided herein, may also be withdrawn on or after April 30,
1998.
For a withdrawal of Shares tendered to be effective, a written, telegraphic,
telex or facsimile transmission notice of withdrawal must be timely received
by the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase. Any notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name(s) in which the certificate(s) representing such Shares
are registered, if different from that of the person who tendered such Shares.
If
6
<PAGE>
certificates for Shares to be withdrawn have been delivered or otherwise
identified to the Depositary, the name of the registered holder and the serial
numbers shown on the particular certificates evidencing such Shares to be
withdrawn must also be furnished to the Depositary prior to the physical
release of the Shares to be withdrawn. The signature(s) on the notice of
withdrawal must be guaranteed by an Eligible Institution (except in the case
of Shares tendered by an Eligible Institution). If Shares have been tendered
pursuant to the procedures for book-entry transfer set forth in Section 2, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with such withdrawn Shares and
must otherwise comply with the Book-Entry Transfer Facility's procedures.
If the Purchaser extends the Offer, is delayed in its acceptance for payment
of any Shares tendered, or is unable to accept for payment or pay for Shares
tendered pursuant to the Offer, for any reason whatsoever, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser, retain tendered Shares, and such
Shares may not be withdrawn except to the extent that the tendering
shareholder is entitled to and duly exercises withdrawal rights as described
in this Section 3 and as otherwise required by Rule 14e-1(c) under the
Exchange Act. Any such delay will be accompanied by an extension of the Offer
to the extent required by law.
Withdrawals of tenders of Shares may not be rescinded, and Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following the
procedures described in Section 2 at any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, and its determination will be final and binding on all parties.
None of the Purchaser, EastGroup, the Depositary, the Information Agent, the
Dealer Manager or any other person will be under any duty to give notification
of any defects or irregularities in any notice of withdrawal, nor shall any of
them incur any liability for failure to give any such notification.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT OF OFFER PRICE. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any extension or amendment), the
Purchaser will accept for payment and will pay for all Shares validly tendered
prior to the Expiration Date (and not properly withdrawn in accordance with
Section 3 above) as soon as practicable after the latest to occur of (i) the
expiration or termination of any waiting period applicable to the acquisition
of the Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"); (ii) the Expiration
Date; and (iii) subject to compliance with Rule 14e-1(c) under the Exchange
Act, the satisfaction or waiver of the conditions of the Offer set forth in
Section 15. Any determination concerning the satisfaction of such terms and
conditions shall be within the sole discretion of the Purchaser, and such
determination shall be final and binding on all tendering shareholders. See
Section 15.
The Purchaser expressly reserves the right to delay acceptance for payment
of, or payment for, Shares in order to comply in whole or in part with any
applicable law. If the Purchaser desires to delay payment for Shares accepted
for payment pursuant to the Offer, and such delay would otherwise be in
contravention of Rule 14e-1(c) of the Exchange Act, the Purchaser will
formally extend the Offer. In all cases, payment for Shares accepted for
payment pursuant to the Offer will be made only after timely receipt by the
Depositary of (i) certificates representing such Shares (or a timely
confirmation of a book-entry transfer of such Shares into the Depositary's
account at the Book-Entry Transfer Facility, as described in Section 2); (ii)
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees (or, in connection with a
book-entry transfer, an Agent's Message); and (iii) any other documents
required by the Letter of Transmittal.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, tendered Shares when, as and if the Purchaser
gives oral or written notice to the Depositary, as agent
7
<PAGE>
for the tendering shareholders, of the Purchaser's acceptance for payment of
such Shares. Payment for Shares so accepted for payment will be made by the
deposit of the purchase price therefor with the Depositary, which will act as
agent for the tendering shareholders for the purpose of receiving such payment
from the Purchaser and transmitting such payment to tendering shareholders.
If, for any reason whatsoever, acceptance for payment of any Shares tendered
pursuant to the Offer is delayed, or the Purchaser is unable to accept for
payment Shares tendered pursuant to the Offer, then, without prejudice to the
Purchaser's rights under Section 1, the Depositary may, nevertheless, on
behalf of the Purchaser, retain tendered Shares, and such Shares may not be
withdrawn, except to the extent that the tendering shareholders are entitled
to withdrawal rights as described in Section 3 and as otherwise required by
Rule 14e-1(c) under the Exchange Act. Under no circumstances will interest be
paid on the purchase price by reason of any delay in making such payments.
If any tendered Shares are not accepted for payment and paid for,
certificates representing such Shares will be returned (or, in the case of
Shares delivered by book-entry transfer with the Book-Entry Transfer Facility
as permitted by Section 2, such Shares will be credited to an account
maintained with the Book-Entry Transfer Facility) without expense to the
tendering shareholder as promptly as practicable following the expiration or
termination of the Offer.
The Purchaser reserves the right to transfer or assign in whole or in part
to one or more affiliates of the Purchaser or EastGroup the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering shareholders to
receive payment for Shares validly tendered and accepted for payment pursuant
to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer (or in the Merger) will be a taxable transaction for
federal income tax purposes (and may also be a taxable transaction under
applicable state, local or other tax laws). In general, a shareholder will
recognize gain or loss for such purposes equal to the difference between such
shareholder's adjusted tax basis for the Shares such shareholder sells in such
transaction (or surrenders in the Merger) and the amount of cash received
therefor. Gain or loss must be determined separately for each block of Shares
(i.e., Shares acquired at the same cost in a single transaction) sold pursuant
to the Offer or converted to cash in the Merger. Such gain or loss will be
capital gain or loss if the Shares are a capital asset in the hands of the
shareholder and will be long term capital gain or loss if the Shares were held
for more than one year on the date of sale (in the case of the Offer) or the
Effective Time of the Merger (in the case of the Merger). The receipt of cash
for Shares pursuant to the exercise of dissenters' rights, if any, will
generally be taxed in the same manner described above. An individual
shareholder's long-term capital gain will be taxed at the lowest applicable
rate (generally 20%) if such shareholder held the Shares for more than
eighteen months on the date of sale or the Effective Time of the Merger,
whichever is the relevant date.
Payments in connection with the Offer or the Merger may be subject to
"backup withholding" at a rate of 31%. Backup withholding generally applies if
the shareholder (i) fails to furnish such shareholder's social security number
or TIN; (ii) furnishes an incorrect TIN; or (iii) under certain circumstances,
fails to provide a certified statement, signed under penalties of perjury,
that the TIN provided is such shareholder's correct number and that such
shareholder is not subject to backup withholding. Backup withholding is not an
additional tax but merely an advance payment, which may be refunded to the
extent it results in an overpayment of tax. Certain persons generally are
entitled to exemption from backup withholding, including corporations and
financial institutions. Certain penalties apply for failure to furnish correct
information and for failure to include reportable payments in income. Each
shareholder should consult with his own tax advisor as to such shareholder's
qualification for exemption from backup withholding and the procedure for
obtaining such exemption. Tendering shareholders may be able to prevent backup
withholding by completing the Substitute Form W-9 included in the Letter of
Transmittal.
8
<PAGE>
The foregoing discussion may not be applicable to a shareholder who acquired
Shares pursuant to the exercise of employee stock options or otherwise as
compensation, or to a shareholder who is not a citizen or resident of the
United States or who is otherwise subject to special tax treatment under the
Internal Revenue Code. In addition, the foregoing discussion does not address
the tax treatment of holders of options or warrants to acquire Shares.
The federal income tax discussion set forth above is included for general
information only and is based upon present law. Shareholders are urged to
consult their tax advisors with respect to the specific tax consequences of
the Offer and the Merger to them, including the application and effect of the
alternative minimum tax, and state, local or foreign income and other tax
laws.
6. PRICE RANGE OF SHARES; DIVIDENDS. The principal market on which the
Common Shares and Preferred Shares are traded is the American Stock Exchange
("AMEX") under the symbols "MPH" and "MPHpr," respectively. The following
table sets forth, for the periods indicated, the high and low per Common Share
and per Preferred Share closing sales prices, each as reported by published
financial sources, and the cash distributions paid by the Company for the
calendar quarters specified.
<TABLE>
<CAPTION>
COMMON SHARES PREFERRED SHARES DISTRIBUTIONS
----------------- --------------------- PAID
HIGH LOW HIGH LOW PER SHARE (1)
------- ------ -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Fiscal Year Ended Decem-
ber 31, 1996:
First Quarter......... $ 2 1/8 $ 1 3/4 $ 6 1/4 $ 4 3/4 $0.07
Second Quarter........ 2 1/2 2 6 1/8 4 3/8 0.07
Third Quarter......... 3 1/4 2 1/4 5 1/8 4 1/2 0.07
Fourth Quarter........ 3 2 1/4 5 3/8 4 3/4 0.07
Fiscal Year Ending De-
cember 31, 1997:
First Quarter......... 3 1/2 2 5/8 5 7/8 5 0.07
Second Quarter........ 4 1/2 3 1/8 8 1/8 5 1/2 0.07
Third Quarter......... 6 3/4 3 13/16 9 1/4 7 0.07
Fourth Quarter........ 6 5/8 4 1/2 9 7 3/4 0.08
Fiscal Year Ending De-
cember 31, 1998:
First Quarter (through
February 20, 1998)... 8 3/8 5 1/8 9 7/8 8 5/8 --
</TABLE>
- --------
(1)Holders of Common Shares and Preferred Shares received equal
distributions in all periods presented.
On February 18, 1998, the last trading day prior to the public announcement
of the terms of the Offer and the Merger, the closing sales price per Common
Share was $7.25 and the closing sales price per Preferred Share was $9.375. On
February 20, 1998, the last trading day prior to commencement of the Offer,
the closing sales price per Common Share was $8.375 and the closing sales
price per Preferred Share was $9.875. Shareholders are urged to obtain a
current market quotation for the Common Shares and Preferred Shares.
7. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; STOCK QUOTATIONS;
REGISTRATION UNDER THE EXCHANGE ACT. The purchase of Shares pursuant to the
Offer will reduce the number of holders of Shares and the number of Shares
that might otherwise trade publicly. Consequently, depending upon the number
of Shares purchased and the number of remaining holders of Shares, the
purchase of Shares pursuant to the Offer may adversely affect the liquidity
and market value of the remaining Shares held by the public. The Purchaser
cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for, or marketability of, the Shares or whether it would cause
future market prices to be greater or less than the Offer price.
Both the Common Shares and the Preferred Shares are currently listed and
traded on AMEX, which constitutes the principal trading market for the Shares.
Depending upon the aggregate market value and the number of Common Shares or
Preferred Shares not purchased pursuant to the Offer, either or both classes
may
9
<PAGE>
no longer meet the quantitative maintenance criteria of AMEX for continued
inclusion on AMEX and may cease to be authorized for quotation on such market.
If, as a result of the purchase of Common Shares or Preferred Shares pursuant
to the Offer or otherwise, the Common Shares or the Preferred Shares no longer
meet the requirements of AMEX for continued inclusion in AMEX, and such shares
are no longer included in AMEX, the market for such shares could be adversely
affected.
In the event that the Common Shares or the Preferred Shares no longer meet
the requirements of AMEX for continued inclusion in AMEX, it is possible that
such shares would trade in the over-the-counter market and that price
quotations would be reported by other sources. The extent of the public market
for the Common Shares or the Preferred Shares and the availability of such
quotations would, however, depend upon the number of holders of Common Shares
or Preferred Shares remaining at such time, the interest in maintaining a
market in Common Shares or Preferred Shares on the part of securities firms,
the possible termination of registration of the Common Shares or Preferred
Shares under the Exchange Act, as described below, and other factors.
The Common Shares and Preferred Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application of the
Company to the Commission if such Common Shares or Preferred Shares are not
listed on a national securities exchange and there are fewer than 300 holders
of record of such shares. The termination of the registration of the Common
Shares or Preferred Shares under the Exchange Act would substantially reduce
the information required to be furnished by the Company to its shareholders
and to the Commission, and would make certain of the provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b) and the requirement of furnishing a proxy statement in connection with
shareholders' meetings and the related requirement of an annual report to
shareholders, and the requirements of Rule 13e-3 with respect to going private
transactions, no longer applicable with respect to such shares or to the
Company. Furthermore, if registration of the Common Shares or Preferred Shares
under the Exchange Act were terminated, the ability of "affiliates" of the
Company and persons holding "restricted securities" of the Company to dispose
of such securities pursuant to Rule 144 promulgated under the Securities Act
of 1933, as amended, may be impaired or, with respect to certain persons,
eliminated. According to the Company, as of February 19, 1998, there were 817
holders of record of Common Shares and 1,252 holders of record of Preferred
Shares.
8. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set forth
herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company
or has been taken from or based upon publicly available documents and records
on file with the Commission and other public sources. Although neither the
Purchaser nor EastGroup has any knowledge that would indicate that the
statements contained herein based on such information are untrue, neither the
Purchaser nor EastGroup takes any responsibility for the accuracy or
completeness of the information concerning the Company furnished by the
Company or contained in such documents and records or for any failure by the
Company to disclose events or information which may have occurred or may
affect the significance or accuracy of any such information but which are
unknown to the Purchaser or EastGroup.
The Company was incorporated in December 1987 under the laws of the State of
Missouri under the name "Sierra Capital Realty Trust VIII Co." and changed its
name to "Meridian Point Realty Trust VIII Co." in September 1993. The
Company's principal executive offices are located at 655 Montgomery Street,
Suite 800, San Francisco, California 94111, and its telephone number is (415)
274-1808. The following description of the Company's business has been taken
from the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996:
"The Company was organized to qualify as a real estate investment trust
("REIT") under Sections 856-860 of the Internal Revenue Code of 1986, as
amended (the "Code"). Under the Code, a REIT must meet certain criteria,
including requirements (a) that certain percentages of its gross income be
derived from specific sources, (b) that it distribute annually to its
shareholders at least 95% of its REIT taxable income (as defined in the
Code), and (c) that it not have five or fewer shareholders who own more
than 50% of the total value of its stock. The Company did not qualify as a
REIT for the years ended December 31, 1992
10
<PAGE>
and 1993 because of the failure to satisfy requirement (c) above. However,
the Revenue Reconciliation Act of 1993 added a provision which allows stock
held by a qualified trust to be treated as held directly by its
beneficiaries in proportion to their actuarial interest; this new "look-
through" rule allows the Company to satisfy requirement (c) above. The
Internal Revenue Service permitted the Company to re-elect its REIT status
beginning in the 1994 tax year.
The Company was formed for the purpose of making equity investments in
income-producing industrial and commercial real estate in selected areas of
projected growth in the United States. At December 31, 1996, the Company
had nine real estate equity investments consisting of twenty-four
properties. The Company's principal objectives are to preserve, protect and
grow the shareholders' capital, provide shareholders with cash dividends,
and achieve capital appreciation through potential appreciation in the
values of the Company's properties. There is no guarantee that the
Company's objectives will be met.
The Company was formed as a self-liquidating finite-life REIT. At the
annual meeting held on June 14, 1996, the shareholders approved an
amendment to the Company's Bylaws related to investment policy which
allowed the Company to reinvest proceeds from the sale of property into the
purchase of new property, thereby converting the Company to an infinite-
life REIT. The general purpose of the Company is to seek income that
qualifies under the REIT provisions of the Code. At such time as it is in
the best interests of the Company's shareholders to do so, the Board of
Directors intends to make investments in such a manner as to comply with
the requirements of the REIT provisions of the Code with respect to the
composition of the Company's investments and the derivation of its income.
The Directors' decision to acquire or sell properties would be based on a
number of factors such as: (i) the vitality of the real estate and money
markets; (ii) the economic climate; (iii) potential environmental
liabilities; and (iv) the income tax consequences to the Company and its
shareholders."
Set forth below is a summary of certain consolidated financial information
with respect to the Company and its consolidated subsidiaries, excerpted or
derived from the information contained in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1996 and its Quarterly Report on
Form 10-Q for the quarter ended September 30, 1997. More comprehensive
financial information is included in such reports and other documents filed by
the Company with the Commission. The financial information summary set forth
below is qualified in its entirety by reference to such reports and other
documents filed with the Commission and all of the financial information and
related notes contained therein. Such reports and other documents may be
inspected and copies may be obtained from the offices of the Commission in the
manner set forth below.
11
<PAGE>
MERIDIAN POINT REALTY TRUST VIII CO.
SUMMARY CONSOLIDATED FINANCIAL INFORMATION
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------- -------------------
1996 1995 1994 1997 1996
-------- -------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total operating revenues.. $ 10,221 $ 11,195 $ 12,081 $ 7,921 $ 6,992
Funds from operations
("FFO") (1).............. 3,736 3,755 3,890 2,931 2,387
Net income (loss)......... 1,352 (274) (1,875) 2,113 649
PER SHARE INFORMATION:
Net income (loss) per
Common Share............. (.08) (1.09) (1.89) .62 (.28)
Dividends per Common and
Preferred Shares......... .28 .28 .22 .21 .21
Common Shares
Outstanding.............. 1,610 1,610 1,610 1,610 1,610
Preferred Shares
Outstanding.............. 5,274 5,274 5,274 5,274 5,274
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
---------------------------- -------------------
1996 1995 1994 1997 1996
-------- -------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate, net.......... $ 66,682 $ 68,777 $ 72,337 $ 74,397 $ 67,383
Total assets.............. 71,594 76,494 91,758 79,353 74,698
Total debt................ 27,613 32,042 44,731 33,872 31,193
Total shareholders'
equity................... 42,466 43,041 45,243 43,133 42,245
</TABLE>
- --------
(1) Industry analysts generally consider FFO to be an appropriate measure of
the performance of an equity REIT. FFO is defined by the National
Association of Real Estate Investment Trusts ("NAREIT") as net income
(computed in accordance with generally accepted accounting principles
("GAAP")) before allocation to minority interests, plus real estate
depreciation and after adjustments for significant nonrecurring items, if
any. It is generally believed that FFO is helpful to investors as a
measure of the performance of an equity REIT because, along with cash
flows from operating activities, financing activities and investing
activities, it provides investors an understanding of the ability of the
equity REIT to incur and service debt and to make capital expenditures.
FFO in and of itself does not represent cash generated from operating
activities in accordance with GAAP and therefore should not be considered
an alternative to net income as an indicator of an equity REIT's
performance or to net cash flows from operating activities as determined
by GAAP as a measure of liquidity and is not necessarily indicative of
cash available to fund cash needs.
Other Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational filing requirements
of the Exchange Act and, in accordance therewith, is obligated to file
periodic reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Information,
as of particular dates, concerning the Company's trustees and officers, their
remuneration, stock options granted to them, the principal holders of the
Company's securities and any material interest of such persons in transactions
with the Company is required to be disclosed in such proxy statements and
distributed to the Company's shareholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the public reference facilities at the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional
offices of the Commission in New York, New York (7 World Trade Center, 13th
Floor, New York, New York 10048) and in Chicago, Illinois (Suite 1400,
Citicorp Center, 500 West Madison Street, Chicago, Illinois 60661-2511). The
Commission maintains a site on the World Wide Web, and the reports, proxy
statements and other information
12
<PAGE>
filed by the Company with the Commission may be accessed electronically on the
Web at http://www.sec.gov. Copies of such material may also be obtained by
mail, upon payment of the Commission's customary fees, from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
9. CERTAIN INFORMATION CONCERNING EASTGROUP AND THE PURCHASER. The Purchaser
is a newly formed Missouri corporation and a wholly-owned subsidiary of
EastGroup. To date, the Purchaser has not conducted any business other than
incident to its formation, the execution and delivery of the Merger Agreement
and the commencement of the Offer.
Until immediately prior to the time that the Purchaser purchases Shares
pursuant to the Offer, it is not anticipated that the Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Since the Purchaser is newly formed and has
minimal assets and capitalization, no meaningful financial information is
available. The address of the principal office of the Purchaser is 300 One
Jackson Place, 188 East Capitol Street, Jackson, Mississippi 39201.
EastGroup is a self-administered REIT focused principally on the ownership,
acquisition and selective development of industrial properties in major
Sunbelt markets throughout the United States. As of February 18, 1998,
EastGroup's industrial property portfolio included 48 properties in nine
states comprising approximately 9.4 million square feet of leasable space, and
three industrial development properties under construction comprising
approximately 234,000 square feet of space. As of December 31, 1997, the
industrial portfolio (excluding the three properties currently under
development) was 97% leased.
EastGroup's principal executive offices are located at 300 One Jackson
Place, 188 East Capitol Street, Jackson, Mississippi 39201-2195. Its telephone
number is (601) 354-3555.
The following table was derived from EastGroup's Annual Report on Form 10-K
(the "EastGroup 1996 Form 10-K") for the fiscal year ended December 31, 1996
("Fiscal 1996"), and sets forth selected consolidated financial information of
EastGroup for the nine month period ended September 30, 1997. More
comprehensive financial information is included in the EastGroup 1996 Form 10-
K and other documents filed by EastGroup with the Commission, and the
following summary is qualified in its entirety by reference to such report and
such other documents and of the financial information (including any related
notes) contained therein. Such report and other documents should be available
for inspection and copies thereof should be obtainable in the manner set forth
in Section 8. Such report and other documents are also available for
inspection at the offices of the NYSE, 20 Broad Street, New York, New York
10005, where the shares of common stock, $0.0001 par value per share, of
EastGroup (the "EastGroup Stock") is listed for trading.
13
<PAGE>
EASTGROUP PROPERTIES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA OF EASTGROUP
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
-------------------------- -------------------
1996 1995 1994 1997 1996
-------- -------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total operating revenues....... $ 39,765 $ 30,264 $ 24,895 $ 38,200 $ 27,627
FFO (1)........................ 14,820 9,847 8,913 17,265 10,193
Net income..................... 12,509 7,711 7,168 16,540 7,250
PER SHARE INFORMATION:
Net income per share........... 1.44 1.22 1.16 1.34 .90
Dividend per share............. 1.28 1.23 1.16 1.00 .95
Average number of common shares
outstanding................... 8,677 6,338 6,170 12,364 8,051
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
-------------------------- -------------------
1996 1995 1994 1997 1996
-------- -------- -------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Real estate, net............... $269,585 $143,733 $151,039 $ 352,892 $ 280,039
Total assets................... 281,455 157,955 154,860 376,786 289,219
Total debt..................... 129,078 71,562 68,229 181,886 138,665
Total stockholders' equity..... 145,326 82,900 82,176 185,919 143,387
</TABLE>
- --------
(1) EastGroup defines FFO, consistent with NAREIT's definition, as net income
(loss) (computed in accordance with GAAP), excluding gains (or losses)
from debt restructuring and sales of property, plus real estate related
depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures. EastGroup believes FFO is helpful to
investors as a measure of the performance of an equity REIT because, along
with cash flows from operating activities, financing activities and
investing activities, it provides investors with an understanding of the
ability of EastGroup to incur and service debt and make capital
expenditures. EastGroup computes FFO in accordance with standards
established by EastGroup, which may differ from the methodology for
calculating FFO utilized by other equity REITs, and, accordingly, may not
be comparable to such other REITs. Further, FFO does not represent amounts
available for management's discretionary use because of needed capital
replacement or expansion, debt service obligations, or other commitments
and uncertainties. FFO should not be considered as an alternative to net
income (determined in accordance with GAAP) as an indication of
EastGroup's financial performance or to cash flows from operating
activities (determined in accordance with GAAP) as a measure of
EastGroup's liquidity, nor is it indicative of funds available to fund
EastGroup's cash needs, including its ability to make distributions.
The name, citizenship, business address, present principal occupation or
employment and five year employment history of each of the directors and
executive officers of EastGroup and the Purchaser are set forth in Annex I and
Annex II hereto, respectively.
EastGroup beneficially owns 1,469,556 Preferred Shares. Except as set forth
on Annex III, none of EastGroup, the Purchaser or, to the best of their
knowledge, any of the persons listed on Annex I or Annex II hereto, or any
associate or majority-owned subsidiary of EastGroup, the Purchaser or any of
the persons so listed, owns or has the right to acquire any Shares or has
effected any transaction in the Shares during the past 60 days.
Except as set forth in this Offer to Purchase, none of EastGroup, the
Purchaser or, to the best of their knowledge, any of the persons listed in
Annex I or Annex II hereto, (i) has any contract, arrangement,
14
<PAGE>
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the
voting of any securities of the Company, joint ventures, loan or option
arrangements, puts or calls, guaranties of loans, guaranties against loss, or
the giving or withholding of proxies; (ii) has engaged in contacts,
negotiations or transactions with the Company or its affiliates concerning a
merger, consolidation, acquisition, tender offer or other acquisition of
securities, election of trustees or directors or a sale or other transfer of a
material amount of assets; or (iii) has had any other transaction with the
Company or any of its executive officers, trustees or affiliates that would
require disclosure under the rules and regulations of the Commission
applicable to the Offer.
10. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by
EastGroup and the Purchaser to purchase all Shares that may be tendered
pursuant to the Offer, and to pay related fees and expenses, is estimated to
be approximately $54.3 million. As of the date hereof, EastGroup has used
approximately $13.9 million (including brokerage commissions) to purchase the
Preferred Shares owned by it. The source of those funds was EastGroup's
working capital, which includes the credit facilities described in the next
paragraph.
The Purchaser will obtain all such funds from EastGroup or its affiliates.
EastGroup has sufficient financial resources to satisfy its and the
Purchaser's obligations under the Offer and the Merger Agreement. This Offer
and the Merger are not conditioned upon any financing arrangements. EastGroup
intends to finance the transactions using its $65.0 million acquisition
facility (the "Acquisition Facility") and its $35.0 million working capital
facility (the "Working Capital Facility"), both with Deposit Guaranty National
Bank, Jackson, Mississippi. Through March 31, 1998, the maximum principal
amount of the Acquisition Facility is $65.0 million and then will be $50.0
million from April 1, 1998 through September 30, 2000. Through March 31, 1998,
the first $48.75 million advanced under the Acquisition Facility will bear
interest at LIBOR plus 1.50% and any advances in excess of $48.75 million will
bear interest at LIBOR plus 1.75%. Effective April 1, 1998, all advances under
the Acquisition Facility will bear interest at LIBOR plus 1.50%. Through March
31, 1998, the maximum principal amount of the Working Capital Facility is
$35.0 million and then will be $25.0 million from April 1, 1998 through
September 30, 1998. Through March 31, 1998, the first $26.25 million advanced
under the Working Capital Facility will bear interest at LIBOR plus 1.50% and
any advances in excess of $26.25 million will bear interest at LIBOR plus
1.75%. Effective April 1, 1998, all advances under the Working Capital
Facility will bear interest at LIBOR plus 1.50%. The Working Capital Facility
may be utilized by the Company for general working capital purposes, including
the acquisition of additional properties. Nine of EastGroup's properties, the
stock of one of EastGroup's wholly-owned subsidiaries and EastGroup's equity
interest in two limited partnerships secure EastGroup's revolving credit
facilities. As of February 16, 1998, EastGroup had borrowed a total of
approximately $41.0 million under the revolving credit facilities described
above.
The Company is presently negotiating to increase the amount available under
its revolving credit facilities, reduce the interest rates on such facilities
and extend the maturity dates thereof; however, no such increase in
availability, reduction in interest rates or extension of maturity will be
necessary to finance the Offer. As of the date hereof, the Company has made no
other plans with respect to the repayment or refinancing of the debt incurred
in connection with the Offer.
11. CONTACTS WITH THE COMPANY; BACKGROUND OF THE OFFER.
In August 1995, the Chairman of the Board of EastGroup received and signed
on behalf of EastGroup a confidentiality agreement which included provisions
restricting EastGroup's ability for a period of two years to acquire
securities of the Company, make or participate in the solicitation of proxies
with respect to the Company, make any offer or proposal with respect to the
Company's securities or join with others to accomplish any of the above
objectives (the "Standstill Agreement"). At that time, the Company had
retained an investment banking firm to advise the Company with respect to its
strategic alternatives and the Company was soliciting indications of interest
regarding a possible business combination, acquisition or other similar
transaction. After EastGroup signed the Standstill Agreement, EastGroup was
provided with certain information with respect to the Company, its properties
and its financial performance and prospects.
15
<PAGE>
In connection with the process in which the Company was engaged in 1995 and
1996, EastGroup conducted additional due diligence with respect to the Company
and made a series of three preliminary proposals to merge with the Company. In
early 1996, the Company's Board of Trustees determined that a business
combination transaction was not in the best interests of the Company's
shareholders at that time and the process in which EastGroup was participating
was terminated.
Despite the termination of this process, EastGroup remained interested in
entering into a business combination transaction with the Company.
Representatives of EastGroup from time to time contacted members of the Board
of Trustees of the Company to discuss the possibility of such a business
combination. Representatives of EastGroup attended the Company's annual
meeting of shareholders in 1997. As noted above, however, EastGroup's ability
to take any actions with respect to the Company were limited by the Standstill
Agreement.
In April 1997, EastGroup became aware that an individual named Alan Meredith
had entered into an agreement to purchase 1,183,556 Preferred Shares from the
Massachusetts Bay Transportation Authority Retirement Fund ("MBTA") for $7.675
per share. After a review of this agreement, EastGroup believed that the
agreement could be terminated by MBTA if MBTA received an offer for its
Preferred Shares that was higher than the price to be paid under the
agreement. Representatives of EastGroup contacted representatives of the
Company to request that EastGroup be released from the Standstill Agreement.
After discussions between representatives of EastGroup and representatives of
the Company and counsel to EastGroup and counsel to the Company, EastGroup was
released from the Standstill Agreement for the sole purpose of contacting and
negotiating with MBTA regarding the purchase of the Preferred Shares held by
MBTA. EastGroup made proposals to MBTA pursuant to which EastGroup would
purchase the Preferred Shares held by MBTA, in one instance for $7.86 per
share and in one instance for $8.02 per share, but was not able to reach an
agreement with MBTA with respect thereto. The agreement between MBTA and Mr.
Meredith was amended and assigned to Turkey Vulture Fund XIII, Ltd. ("Turkey
Vulture") which eventually purchased the MBTA Preferred Shares for $8.00 per
share on June 3, 1997.
EastGroup continued to request that it be released completely from the
Standstill Agreement. On May 30, 1997, EastGroup was released from the
Standstill Agreement for the sole purpose of contacting and negotiating with
Massachusetts State Teachers' and Employees' Retirement Systems Trust
("Masters") regarding the purchase of the 1,560,754 Preferred Shares owned by
Masters. Similarly, on June 2, 1997 EastGroup was released from the Standstill
Agreement for the purpose of contacting and negotiating with the Chicago Truck
Drivers, Helpers & Warehouse Workers Union (Independent) Pension Fund
("Chicago") regarding the purchase of the 521,164 Preferred Shares owned by
Chicago. EastGroup had discussions with both Masters and Chicago with respect
to their Preferred Shares. EastGroup also made proposals to Masters to
purchase its Preferred Shares for $8.02 per share and $8.55 per share but was
unable to reach agreement with Masters with respect to the purchase thereof.
After Turkey Vulture's purchase of shares from the MBTA, a group of
individuals, including Turkey Vulture's manager, began a proxy solicitation to
elect five of their nominees to the Company's Board of Trustees. In connection
with the vote at the Company's annual meeting, the Company invoked the excess
share provisions of Section 6.5 of the Company's Bylaws (which prohibit any
person, from owning, directly or indirectly, more than 9.8% of the outstanding
Shares) to deny Turkey Vulture voting rights with respect to Preferred Shares
owned in excess of the 9.8% limit. As a result of the limitation on voting
rights, only one of their nominees was elected to the Board of Trustees.
Litigation ensued between the Company and Turkey Vulture with respect to the
Company's limitation on Turkey Vulture's voting, dividend and other rights
with respect to the Preferred Shares Turkey Vulture owned in excess of the
9.8% limit. The Company had previously informed EastGroup that it was not
presently aware of any basis to argue that EastGroup's ownership of more than
9.8% of the Shares would result in a violation of the Company's Bylaws, and
that the Company had no present intention of asserting such a position with
respect to
16
<PAGE>
EastGroup. Counsel to EastGroup requested that EastGroup be released from the
Standstill Agreement for purposes of inquiring whether Turkey Vulture would be
interested in selling its Shares and counsel to the Company informed counsel
to EastGroup that the Company would have no objection to EastGroup making such
inquiry. A representative of EastGroup made an inquiry to a representative of
Turkey Vulture to determine whether Turkey Vulture might be interested in
selling the Preferred Shares owned by it to EastGroup. A meeting between a
representative of EastGroup and a representative of Turkey Vulture took place
in August 1997 and an agreement in principle was reached pursuant to which
Turkey Vulture and certain affiliated parties would sell their Preferred
Shares to EastGroup for $9.50 per share. These transactions were closed on
August 27, 1997, and in a separate transaction the litigation between the
Company and Turkey Vulture was settled.
In its statement on Schedule 13D filed on August 27, 1997 with respect to
the purchase of the Preferred Shares previously held by Turkey Vulture (the
"Schedule 13D"), EastGroup indicated that it anticipated proposing to the
Board of Trustees of the Company a negotiated business combination transaction
between the Company and EastGroup in which EastGroup would be the surviving
entity. EastGroup also indicated that it might pursue a tender offer or
similar transaction involving the Company, but that it had not yet formulated
a definitive proposal with respect to any possible business combination or
offer. Shortly after the filing of the Schedule 13D, representatives of
EastGroup contacted representatives of the Company and counsel to EastGroup
contacted counsel to the Company to inform them that EastGroup was in the
process of making a number of significant real estate acquisitions and
planning financing for such acquisitions and that it would be several weeks
before it would be possible for EastGroup to focus on its plans with respect
to the Company.
On November 14, 1997, the Company issued a press release indicating that it
had implemented a Shareholder Rights Plan and that it had retained Prudential
to advise it with respect to its strategic alternatives.
On December 2, 1997 representatives of EastGroup met with representatives of
the Company. At that meeting the EastGroup representatives reviewed the
history of EastGroup's dealing with the issuer, including EastGroup's
participation in the process instituted by the Company in 1995 and early 1996
in which EastGroup made the proposals outlined above. The EastGroup
representatives stated EastGroup's desire to promptly enter into negotiations
with the Company with respect to a business combination transaction between
EastGroup and the Company. The representatives of the Company indicated to
EastGroup that the Company was in the process of evaluating the Company's
strategic alternatives and that the Company had retained Prudential to help
the Company in such evaluation. The EastGroup representatives informed the
Company representatives that EastGroup believed that a merger between
EastGroup and the Company was in the best interest of all parties, and that it
was EastGroup's present intention to oppose and vote its Preferred Shares
against any strategic alternative of the Company that would delay or frustrate
such transaction. Further, in light of EastGroup's position and EastGroup's
significant holdings in the Company, the EastGroup representatives indicated
their view that is was impractical and not necessary for the Company to
explore such strategic alternatives. At the December 2, 1997 meeting (and on
several occasions subsequent thereto), representatives of the Company
requested that EastGroup sign a confidentiality agreement containing a limited
standstill provision with respect to receiving non-public information of the
Company. EastGroup reiterated its desire to promptly enter into negotiations
with the Company with respect to a business combination transaction.
Representatives of the Company at the meeting indicated that they would
discuss EastGroup's proposal with the Board of Trustees of the Company at a
regularly scheduled meeting later in December.
In mid-December, counsel to the Company informed counsel to EastGroup that
the Company would be interested in holding discussions with EastGroup with
respect to a negotiated business combination transaction, but that the Company
would not be in a position to commence such discussions until mid-January.
Counsel to EastGroup indicated that EastGroup would prefer to start such
negotiations at an earlier date, but offered the Company the opportunity to
perform a due diligence investigation with respect to EastGroup prior to the
beginning of discussions with respect to a business combination transaction.
On January 8, 1998 representatives of the Company and Prudential visited
EastGroup's offices in Jackson, Mississippi to perform a preliminary due
17
<PAGE>
diligence investigation with respect to EastGroup's business, assets and
prospects. In connection with this investigation, the Company executed a
confidentiality agreement with respect to the receipt of non-public
information from EastGroup.
Representatives of the Company were scheduled to meet with representatives
of EastGroup to discuss a negotiated business combination transaction during
the week of January 12, 1998. It became apparent, however, that the Company,
although willing to hold discussions and negotiations with EastGroup, did not
believe it would be in a position to make a final decision with respect to
such a proposed transaction at that time. Accordingly, the meeting never took
place. The Company again encouraged EastGroup to execute a confidentiality
agreement with a limited standstill provision and to receive the Company's
non-public information so that EastGroup could remove as many contingencies as
possible from any proposal that EastGroup might make with respect to a
business combination transaction with the Company.
EastGroup did not want to execute a confidentiality agreement because of the
limitations it would put on EastGroup's ability to deal with the Company and
EastGroup's investment in Preferred Shares. After careful consideration,
management of EastGroup decided to recommend to EastGroup's Board of Directors
that EastGroup make a proposal to merge with the Company. At a meeting on
January 16, 1998, EastGroup's Board of Directors approved the making of such
an offer. Shortly after the Board of Directors meeting, EastGroup sent the
following letter to the Company (the "Offer to Merge") and disclosed the Offer
to Merge in an amendment to its Schedule 13D:
"[Letterhead of EastGroup]
Meridian Point Realty Trust VIII Co. 655 Montgomery Street, Suite 800 San
Francisco, California 94111
Re: Meridian Point Realty Trust VIII Co.
Ladies and Gentlemen:
This letter will serve as an offer by EastGroup Properties, Inc.
("EastGroup") to engage in a transaction (the "Merger") in which Meridian
Point Realty Trust VIII Co. ("Meridian VIII") would be merged with and into a
wholly-owned subsidiary of EastGroup ("Sub"). In the Merger, each share of
preferred stock of Meridian VIII (the "Preferred Shares") will be converted
into EastGroup shares with a value of $9.75 and each share of common stock of
Meridian VIII (the "Common Shares") will be converted into EastGroup shares
with a value of $6.75. Meridian VIII shareholders will have the option to
exchange their Preferred Shares or Common Shares for $9.75 and $6.75 in cash,
respectively, provided that the total number of Preferred Shares and Common
Shares surrendered for cash, including shares surrendered pursuant to the
exercise of dissenters' rights, may not exceed 30% of all issued and
outstanding Preferred Shares (excluding Preferred Shares currently held by
EastGroup) and 30% of all issued and outstanding Common Shares.
Our offer is not subject to any financing or due diligence contingencies and
is subject only to the preparation and negotiation of a definitive merger
agreement and the approval of such agreement by EastGroup's Board of
Directors. We believe that our offer represents an extremely attractive
opportunity for your shareholders and intend to complete the Merger with a
minimum of delay. We are prepared to begin immediately negotiating a
definitive agreement containing mutually agreeable terms and conditions for
the Merger on the financial terms specified above.
Simultaneously with the delivery of this letter, we are filing an amendment
to our statement on Schedule 13D. We will advise the New York Stock Exchange
and the American Stock Exchange of this proposal prior to the opening of
business on January 20, 1998.
18
<PAGE>
Our objective is to work with you in a professional and constructive manner
to complete this transaction so that its full potential can be realized and
the best interests of all of your shareholders can be served. We encourage you
to consider our offer as a basis for, and not an obstacle to, meaningful
discussions between us, and we invite you to confirm your willingness to enter
discussions promptly for the benefit of your shareholders.
Since this matter is of the utmost importance, we feel compelled to ask for
a response to our proposal from your Board of Trustees no later than 12:00
noon, Central Standard Time on Friday, January 30, 1998, after which time our
proposal will expire unless extended in writing.
We are available to discuss these important matters with you at any time.
This matter has the highest priority for all of us at EastGroup and we look
forward to hearing from you promptly.
Very truly yours,
EastGroup Properties, Inc.
/s/ Leland R. Speed
Leland R. Speed
Chairman"
On January 20, 1998, the Company issued a press release in response to the
Offer to Merge that read, in relevant part, as follows:
"Jan. 20, 1998--Meridian Point Realty Trust VIII Co. (AMEX:MPH and MPHPR)
today acknowledged that on January 16, 1998, it had received an Offer to
Merge from EastGroup Properties Inc. In the Merger Offer, each share of
preferred stock of Meridian would be converted into EastGroup shares with a
value of $9.75, and each share of common stock of Meridian VIII would be
converted into EastGroup shares with a value of $6.75. Meridian VIII
shareholders would have the option to exchange their Preferred Shares or
Common Shares for $9.75 and $6.75 in cash, respectively, provided that the
total number of Preferred Shares and Common Shares surrendered for cash,
including shares surrendered pursuant to the exercise of dissenters'
rights, would not exceed 30 percent of all issued and outstanding Preferred
Shares (excluding Preferred Shares currently held by EastGroup) and 30
percent of all issued and outstanding Common Shares. On January 8, 1998,
the Company entered into a Standstill and Confidentiality Agreement with
EastGroup and began the process of reviewing certain financial and other
confidential information regarding EastGroup in order to evaluate any
information necessary to evaluate the EastGroup Offer to Merge.
Furthermore, EastGroup has refused a request from the Company that it
execute a Confidentiality and Standstill Agreement. The Company intends to
review the EastGroup Offer to Merge with its financial advisor, Prudential
Securities Inc., which has previously been retained to assist the Company
in evaluating its strategic options. The Company anticipates providing a
response to the EastGroup Offer to Merge on or before January 30, 1998. In
the meantime, the Company will continue to review all of its strategic
options with the assistance of Prudential Securities Inc."
After the issuance of the press release, conversations occurred between
representatives of EastGroup and representatives of the Company,
representatives of PaineWebber, financial advisor to EastGroup, and
representatives of Prudential, and counsel to EastGroup and counsel to the
Company. Counsel to EastGroup sent counsel to the Company a draft of a
proposed Agreement and Plan of Merger pursuant to which the Offer to Merge
would be effected.
On January 29, 1998, the Company sent the following letter to EastGroup and
the Chief Executive Officer of the Company telephoned the Chairman of
EastGroup to inform EastGroup of the letter's contents:
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"[Letterhead of the Company]
Leland R. Speed
Chairman
EASTGROUP PROPERTIES
300 One Jackson Place
188 East Capitol Street
Jackson, MS 39201-2195
RE: EastGroup Offer to Merge
Dear Mr. Speed:
Thank you for you letter of January 16, 1998 and the Offer to Merge
contained therein. The Board of Directors of Meridian Point Realty Trust VIII
Co. (the "Company") has reviewed the Offer and the proposed Agreement and Plan
of Merger recently forwarded by your attorney. We very much appreciate your
continuing interest in the Company.
The Company is not prepared to accept your offer at this time, but is
willing to meet and discuss the specifics of the offer at your earliest
convenience. In general, we have reason to believe the value of the Company is
in excess of your offer. In addition, the cash component of your offer may be
problematic for the Company's shareholders, particularly in view of the
absence of proposed board representation. In addition, the price protection
mechanisms are inadequate, although they can likely be resolved through
discussion. Finally, there are certain due diligence contingencies in your
proposed Agreement that are not acceptable. In that regard, we believe a
complete due diligence review would allow you to remove those contingencies
from the proposed Agreement.
The Company repeats its request that EastGroup execute a limited
Confidentiality and Standstill Agreement so that you might obtain the benefit
of more complete information regarding the Company, including the relevant
economics of the proposed transaction.
We look forward to meeting with you or your representatives as soon as
possible in order to continue our discussions.
Very truly yours,
/s/ Robert H. Gidel
Robert H. Gidel
Chief Executive Officer"
The Company also released a press release on January 29, 1998 that read, in
relevant part, as follows:
"Jan. 29, 1998--Meridian Point Realty Trust VIII Co. (AMEX:MPH)
(AMEX:MPHPR) today announced that it is not in a position to accept the
merger offer of EastGroup Properties at this time. As part of the company's
review of its strategic alternatives, the company has received favorable
indications of interest from several other potential investors. As a
result, the company intends to continue to review its strategic
alternatives at this time, including alternatives that may exist with
EastGroup Properties and those with other potential investors."
On January 30, 1998, a representative of PaineWebber had discussions with a
representative of Prudential. During these discussions, the PaineWebber
representative indicated that he believed EastGroup might be willing to
increase the amount of its offer and the cash portion of the consideration to
be paid to the Company's shareholders. The PaineWebber representative gave the
Prudential representative a range of what he thought EastGroup might be
prepared to offer to the Company's shareholders. The Prudential representative
indicated
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that he believed that if EastGroup could make a proposal in the dollar range
of the proposal outlined by the PaineWebber representative, he thought that
there could be a basis for an agreement.
During the period from January 30, 1998 through February 18, 1998,
discussions continued between and among representatives of EastGroup and
PaineWebber and counsel to EastGroup and representatives of the Company and
Prudential and counsel to the Company. These discussions included the amount
and kind of consideration to be paid to holders of Common Shares and Preferred
Shares, the conditions of a proposed Agreement and Plan of Merger, and whether
EastGroup would execute a confidentiality agreement with respect to the
receipt of non-public information. On February 10, 1998, EastGroup did execute
a limited confidentiality agreement with no standstill provision and was given
access to certain of the Company's non-public information (mostly relating to
the structural and environmental conditions of the Company's properties) on
February 10 and 11, 1998. On February 13, 1998, the EastGroup Board of
Directors met and authorized the management of EastGroup to propose to the
Company a business combination transaction in which EastGroup would pay $8.00
for each Common Share and $10.00 for each Preferred Share in cash. On February
17, 1998, representatives of Prudential contacted representatives of
PaineWebber and indicated that the Company had received a proposal from a
third party pursuant to which holders of Common Shares would receive more than
$8.00 per Common Share. After consideration, EastGroup determined to increase
its proposal so that EastGroup would pay $8.50 for each Common Share. The
Board of Directors of EastGroup approved the Merger Agreement on February 17,
1998 and the Board of Trustees of the Company approved it on February 17,
1998.
Other Transactions Between EastGroup and the Company. In June 1997, in an
arms-length transaction unrelated to the Offer or the Merger, EastGroup
purchased a 67,275 square foot industrial property in Richland, Mississippi
from the Company for $3,050,000. EastGroup became interested in the purchase
of this property from the Company because EastGroup already owned another
industrial property in the same business park.
12. PURPOSE OF THE OFFER; SHORT FORM MERGER; PLANS FOR THE COMPANY;
DISSENTERS' RIGHTS; GOING PRIVATE TRANSACTIONS.
Purpose of the Offer. The purpose of the Offer is for the Purchaser to
acquire control of, and a majority equity interest in, the Company. The
purpose of the Merger is to acquire all outstanding Shares not tendered and
purchased pursuant to the Offer. The acquisition of the entire equity interest
in the Company has been structured as a cash tender offer followed by a merger
in order to provide a prompt and orderly transfer of ownership of the Company
from the public shareholders to EastGroup and to provide shareholders with
cash for all of their Shares.
Under the GBCL and the Company's Charter, the approval of the Board of
Trustees of the Company and the affirmative vote of two-thirds of the total
number of outstanding shares of capital stock of the Company entitled to vote
on a merger are required to approve and adopt the Merger Agreement and the
Merger. The Board of Trustees of the Company has approved the Offer, the
Merger and the Merger Agreement and the transactions contemplated thereby,
and, unless the Merger is consummated pursuant to the short-form merger
provisions under the GBCL described below, the only remaining required
corporate action of the Company is the approval and adoption of the Merger
Agreement and the Merger by the affirmative vote of the holders of two-thirds
of the outstanding Shares. If the Minimum Condition is satisfied, EastGroup
will have sufficient voting power to cause the approval and adoption of the
Merger Agreement and the Merger without the affirmative vote of any other
shareholder.
The Merger Agreement provides that, if approval of the Merger by the
shareholders of the Company is required by law, the Company will, as soon as
possible following payment for Shares in the Offer, duly call and hold a
meeting of shareholders for the purpose of obtaining shareholder approval of
the Merger, and the Company, through its Board of Trustees, will recommend to
shareholders that such approval be given.
Short Form Merger. Under the GBCL, if EastGroup beneficially owns at least
90% of the outstanding Common Shares and 90% of the outstanding Preferred
Shares, the Merger could be effected without the action
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of any shareholder other than EastGroup. The Merger Agreement provides that if
the Purchaser acquires at least 90% of the outstanding Common Shares and 90%
of the outstanding Preferred Shares, EastGroup, the Purchaser and the Company
will take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
meeting of shareholders of the Company, in accordance with Section 351.447 of
the GBCL. If the Purchaser does not acquire at least 90% of the outstanding
Common Shares and 90% of the outstanding Preferred Shares, a significantly
longer period of time may be required to effect the Merger, because a vote of
the Company's shareholders would be required under the GBCL.
Plans for the Company. EastGroup will integrate the operations of the
Company with the operations of EastGroup after the Merger. The Company's
present trustees and officers will no longer serve in such positions and the
business and assets of the Company will be managed by the officers and
directors of EastGroup. Except as described in this Offer to Purchase, neither
EastGroup nor the Purchaser has any present plans or proposals that would
relate to or result in (i) any extraordinary corporate transaction, such as a
merger, reorganization or liquidation, involving the Company or any of its
subsidiaries; (ii) a sale or transfer of a material amount of assets of the
Company or any of its subsidiaries; (iii) any change in the Company's Board of
Trustees or management; (iv) any material change in the Company's
capitalization or dividend policy; (v) any other material change in the
Company's corporate structure or business; (vi) a class of securities of the
Company being delisted from a national securities exchange or ceasing to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association; or (vii) a class of equity securities of the
Company becoming eligible for termination of registration pursuant to Section
12(g) of the Exchange Act.
Dissenters' Rights. No dissenters' rights are available in connection with
the Offer. However, if the Merger is consummated, shareholders of the Company
may have certain rights under the GBCL to dissent, and demand appraisal of,
and to obtain payment for the fair value of their Shares. Such rights, if the
statutory procedures were complied with, could lead to a judicial
determination of the fair value of the Shares (excluding any element of value
arising from the accomplishment or expectation of the Merger) to be required
to be paid in cash to such dissenting holders for their Shares. In determining
the fair value of the Shares, a Missouri court would be required to take into
account all relevant factors. Accordingly, such determination could be based
upon considerations other than, or in addition to, the market value of the
Shares, including, among other things, asset value and earning capacity.
Therefore, the value so determined in any appraisal proceeding could be
different from the price being paid in the Offer and the Merger.
Going Private Transactions. The Merger would have to comply with any
applicable Federal law operative at the time. The Commission has adopted Rule
13e-3 under the Exchange Act which is applicable to certain "going private"
transactions and which may under certain circumstances be applicable to the
Merger or another business combination following the purchase of Shares
pursuant to the Offer in which the Purchaser or EastGroup seeks to acquire the
remaining Shares not held by it. The Purchaser believes, however, that Rule
13e-3 will not be applicable to the Merger. If applicable, Rule 13e-3
requires, among other things, that certain financial information concerning
the Company and certain information relating to the fairness of such
transaction and the consideration offered to minority shareholders in such
transaction be filed with the Commission and disclosed to shareholders prior
to the consummation of such transaction.
13. THE MERGER AGREEMENT.
The Merger Agreement. The following summary of certain provisions of the
Merger Agreement, a copy of which is filed as an exhibit to the Schedule 14D-1
referred to in Section 18, is qualified in its entirety by reference to the
text of the Merger Agreement. Capitalized terms used in the following summary
and not otherwise defined in this Offer to Purchase shall have the meanings
set forth in the Merger Agreement.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the prior satisfaction or
waiver of the conditions of the Offer, the Purchaser will purchase all Shares
validly tendered pursuant to the Offer. The Merger Agreement provides that,
without the written
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consent of the Company, the Purchaser will not (i) reduce the number of Common
Shares and Preferred Shares to be purchased in the Offer; (ii) reduce the
Common Share Offer Price or the Preferred Share Offer Price, except as
otherwise provided in the Merger Agreement; (iii) modify or add to the
conditions of the Offer in any manner that the Board of Trustees of the
Company, in the exercise of its fiduciary obligations, determines to be
adverse to the holders of Common Shares or Preferred Shares; (iv) except as
provided in the Merger Agreement, extend the Offer; (v) change the form of
consideration payable in the Offer; or (vi) amend any other term of the Offer
in a manner that the Board of Trustees of the Company, in the exercise of its
fiduciary obligations, determines to be adverse to the holders of Common
Shares and Preferred Shares. The Merger Agreement provides that,
notwithstanding the foregoing, the Purchaser may, without the consent of the
Company, (i) extend the Offer beyond the Expiration Date for a period not to
exceed 20 business days, if at the Expiration Date any of the conditions to
the Purchaser's obligation to accept for payment, and pay for, Common Shares
and Preferred Shares shall not be satisfied or waived, until such time as such
conditions are satisfied or waived; or (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Commission
or the staff thereof applicable to the Offer.
The Merger. The Merger Agreement provides that, following the consummation
of the Offer and subject to the terms and conditions thereof, at the Effective
Time the Purchaser shall be merged with and into the Company and, as a result
of the Merger, the separate corporate existence of the Purchaser shall cease,
and the Company shall continue as the Surviving Corporation and a wholly-owned
subsidiary of EastGroup.
The respective obligations of EastGroup and the Purchaser, on the one hand,
and the Company, on the other hand, to effect the Merger are subject to the
satisfaction at or prior to the Effective Time of each of the following
conditions: (i) the Merger Agreement shall have been approved by the requisite
vote of the shareholders, if required by applicable law, in order to
consummate the Merger; (ii) no temporary restraining order, preliminary or
permanent injunction or other order by any United States federal or state
court or governmental body which prohibits the consummation of the
transactions contemplated by the Merger Agreement shall have been issued;
provided, however, that the Purchaser, EastGroup and the Company shall have
used all reasonable efforts to have such order or injunction vacated or
reversed; and (iii) if applicable, the waiting period under the HSR Act shall
have expired or shall have been terminated.
At the Effective Time of the Merger, each Preferred Share issued and
outstanding (other than Dissenting Shares representing Preferred Shares and
those Preferred Shares held by the Company, any subsidiary of the Company,
EastGroup or the Purchaser which are to be canceled pursuant to the Merger
Agreement) shall be converted into the right to receive in cash, without
interest, the price per Preferred Share paid pursuant to the Offer (the
"Preferred Merger Price").
At the Effective Time of the Merger, each Common Share issued and
outstanding (other than Dissenting Shares representing Common Shares and those
Common Shares held by the Company, any subsidiary of the Company, EastGroup or
the Purchaser which are to be canceled pursuant to the Merger Agreement) shall
be converted into the right to receive in cash, without interest, the price
per Common Share paid pursuant to the Offer (the "Common Merger Price").
Also as of the Effective Time, each issued and outstanding share of the
capital stock of the Purchaser shall be converted into and become one fully
paid and nonassessable common share, $0.001 par value per share, of the
Surviving Corporation.
The Company's Board of Trustees. The Merger Agreement provides that promptly
upon the purchase by the Purchaser or EastGroup of Preferred Shares and Common
Shares pursuant to the Offer, EastGroup shall be entitled to designate three
persons to serve as trustees on the Company's Board of Trustees, subject to
compliance with Section 14(f) of the Exchange Act, if applicable. At such
time, if requested by EastGroup, the
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Company will also cause each committee of the Board of Trustees of the Company
to include persons designated by EastGroup constituting the same percentage of
each such committee as EastGroup's designees are of the Board of Trustees of
the Company. The Company shall, upon request by EastGroup, promptly exercise
reasonable best efforts to secure the resignations of such number of trustees
as is necessary to enable EastGroup's designees to be elected to the Board of
Trustees of the Company in accordance with the terms of the Merger Agreement
and to cause EastGroup's designees so to be elected. In no event shall the
Company expand the Board of Trustees so that the total number of trustees
shall exceed seven persons. The Company shall promptly take all action
necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder in order to fulfill its obligations under the Merger
Agreement and shall include in the Schedule 14D-9 mailed to shareholders
promptly after the commencement of the Offer (or in an amendment thereof or
the information statement to be filed by the Company in connection with the
Offer pursuant to Rule 14f-1 promulgated under the Exchange Act (the
"Information Statement") if EastGroup has not theretofore designated trustees)
such information with respect to the Company and its officers and trustees as
is required under Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under the Merger Agreement.
Shareholders' Meeting. Pursuant to the Merger Agreement, the Company will,
at EastGroup's request, duly call, give notice of, convene and hold a meeting
of its shareholders if such meeting is required by applicable law for the
purpose of approving the Merger Agreement and the transactions contemplated
thereby. The Merger Agreement provides that the Company will, at EastGroup's
request, prepare and file with the Commission and, when cleared by the
Commission, will mail to shareholders, a proxy statement with respect to the
Company's shareholders' meeting to vote upon the Merger Agreement and Merger
transactions, or the Information Statement, as appropriate, satisfying all
requirements of the Exchange Act.
If the Purchaser acquires at least 3,186,354 Shares as a result of the
Offer, EastGroup will beneficially own two-thirds of the outstanding Shares.
In such event, EastGroup would have sufficient voting power to approve the
Merger, even if no other shareholder votes in favor of the Merger.
The Merger Agreement provides that in the event that the Purchaser acquires
at least 90% of the Common Shares outstanding and 90% of the Preferred Shares
outstanding, pursuant to the Offer or otherwise, EastGroup, the Purchaser and
the Company will take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after such acquisition, without a
meeting of shareholders of the Company, in accordance with the GBCL. For a
discussion of certain terms of the Merger Agreement that increase the
likelihood that the Purchaser could acquire at least 90% of the outstanding
Common Shares and 90% of the outstanding Preferred Shares, see the discussion
of the Contingent Options in the immediately following paragraph.
Contingent Options of the Purchaser. Pursuant to the Merger Agreement, the
Company has granted the Purchaser irrevocable options (the "Contingent
Options") to (i) purchase for a price of $8.50 per Common Share (the "Per
Common Share Price") in cash a number of Common Shares (the "Optioned Common
Shares") equal to the Applicable Common Share Amount (as defined below) and
(ii) purchase for a price of $10.00 per Preferred Share (the "Per Preferred
Share Price") in cash a number of Preferred Shares (the "Optioned Preferred
Shares") equal to the Applicable Preferred Share Amount (as defined below).
The "Applicable Common Share Amount" is the number of Common Shares which,
when added to the number of Common Shares owned by EastGroup and the Purchaser
immediately prior to the exercise of the option, would result in the Purchaser
owning immediately after the exercise of the option 90% of the then
outstanding Common Shares. The "Applicable Preferred Share Amount" is the
number of Preferred Shares owned by EastGroup and the Purchaser which, when
added to the number of Preferred Shares owned by EastGroup and the Purchaser
immediately prior to the exercise of the option, would result in the Purchaser
owning immediately after the exercise of the option 90% of the then
outstanding Preferred Shares. The Purchaser may exercise the Contingent
Options only if at the time of exercise, it (i) shall have accepted Common
Shares or Preferred Shares, as appropriate, for payment pursuant to the Offer;
and (ii) the Minimum Condition has been satisfied.
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Interim Operations; Covenants. Prior to the Effective Time, except as
specifically permitted by the Merger Agreement, unless the other party has
consented in writing thereto, EastGroup and the Company (i) shall use their
reasonable best efforts, and shall cause each of their respective subsidiaries
to use their reasonable best efforts, to preserve intact their business
organizations and goodwill and keep available the services of their respective
officers and employees; (ii) shall confer on a regular basis with one or more
representatives of the other to report operational matters of materiality and,
subject to the Merger Agreement, any proposals to engage in material
transactions; (iii) shall promptly notify the other of any material emergency
or other material change in the condition (financial or otherwise), business,
properties, assets, liabilities, prospects or in the normal course of their
businesses or in the operation of their properties, any material governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or the breach in any material respect of any
representation or warranty contained herein; and (iv) shall promptly deliver
to the other true and correct copies of any report, statement or schedule
filed with the Commission subsequent to the date of the Merger Agreement.
Pursuant to the Merger Agreement, the Company has agreed that, unless agreed
to by EastGroup, after the date of the Merger Agreement and prior to the
Effective Time, the Company (i) shall conduct, and it shall cause the Company
subsidiaries to conduct, its or their operations according to their usual,
regular and ordinary course in substantially the same manner as conducted
prior to the date of the Merger Agreement; (ii) shall not, and shall cause
each Company subsidiary not to, acquire, enter into an option to acquire or
exercise an option or contract to acquire additional real property, incur
additional indebtedness, encumber assets or commence construction of, or enter
into any agreement or commitment to develop or construct, any other type of
real estate projects except for the transactions contemplated in the
Disclosure Schedule; (iii) shall not amend the Charter or the Bylaws of the
Company, and shall cause each Company subsidiary not to amend its charter,
bylaws, joint venture documents, partnership agreements or equivalent
documents except as contemplated by the Merger Agreement; (iv) shall not (a)
issue any shares of its capital stock, effect any stock split, reverse stock
split, stock dividend, recapitalization or other similar transaction, (b)
grant, confer or award any option, warrant, conversion right or other right
not existing on the date hereof to acquire any shares of its capital stock,
(c) increase any compensation or enter into or amend any employment agreement
with any of its present or future officers or trustees, or (d) adopt any new
employee benefit plan (including any stock option, stock benefit or stock
purchase plan) or amend any existing employee benefit plan in any material
respect, except for changes which are less favorable to participants in such
plans; (v) shall not, and shall not permit any of the Company subsidiaries to,
except in accordance with and as permitted under the Merger Agreement, sell,
lease or otherwise dispose of (A) any Company Properties or any portion
thereof or any of the capital stock of or partnership or other interests in
any of the Company subsidiaries or (B) except in the ordinary course of
business, any of its other assets which are material, individually or in the
aggregate; (vi) shall not, and shall not permit any of the Company
subsidiaries to, make any loans, advances or capital contributions to, or
investments in, any other person; (vii) shall not, and shall not permit any of
the Company subsidiaries to, pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by,
the most recent consolidated financial statements (or the notes thereto) of
the Company included in the Company Public Reports or incurred in the ordinary
course of business consistent with past practice; (viii) shall not, and shall
not permit any of the Company subsidiaries to, enter into any material
commitment, contractual obligation, borrowing, capital expenditure or
transaction (each, a "Commitment") which may result in total payments or
liability by or to it in excess of $50,000 other than Commitments for expenses
of attorneys, accountants and investment bankers incurred in connection with
the Merger; (ix) shall not, and shall not permit any of the Company
subsidiaries to, enter into any Commitment with any officer, trustee,
director, consultant or affiliate of the Company or any of the Company
subsidiaries; and (x) shall use its best efforts to assist the Purchaser in
making contact with the financial institutions that are lenders to the Company
for the purpose of obtaining any necessary consents.
In addition, the Company shall not, without the written consent of
EastGroup, which consent may not be unreasonably withheld, (i) effect any
material change in any lease or occupancy agreement currently in effect
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which affects the Company Properties (together with such additional leases
approved or permitted pursuant to the Merger Agreement, the "Leases"); (ii)
renew or extend the term of any Lease, unless the same is an extension or
expansion permitted pursuant to the terms of an existing Lease; or (iii) enter
into any new Lease or cancel or terminate any Lease. Notwithstanding anything
in the Merger Agreement to the contrary, the Company may cancel or terminate
any Lease or commence collection, unlawful detainer or other remedial action
against any tenant without EastGroup's consent upon the occurrence of a
default by the tenant under said Lease.
No Solicitation. The Merger Agreement provides that unless and until the
Merger Agreement shall have been terminated in accordance with its terms, the
Company agrees and covenants that (i) neither it nor any Company subsidiary
shall, and each of them shall direct and use its best efforts to cause its
respective officers, trustees, directors, employees, agents and
representatives (including, without limitation, any investment banker,
attorney or accountant retained by it or any of the Company subsidiaries) not
to, directly or indirectly, initiate, solicit or knowingly encourage any
inquiries or the making or implementation of any proposal or offer (including,
without limitation, any proposal or offer to its shareholders) with respect to
a merger, acquisition, tender offer, exchange offer, consolidation or similar
transaction involving, or any purchase, sale, lease, issuance or other
disposition (except as permitted under the Merger Agreement) of (a) 10% or
more of the assets; (b) any equity securities (or options, rights or warrants
to purchase, or securities convertible into, such securities) representing 10%
or more of the voting power; (c) partnership interests; or (d) any transaction
in which any person shall acquire beneficial ownership (as such term is
defined in Rule 13d-3 under the Exchange Act), or the right to acquire
beneficial ownership, of 10% or more of the equity securities, of the Company
or any Company subsidiary, other than the transactions contemplated by the
Merger Agreement (any such proposal or offer being hereinafter referred to as
an "Acquisition Proposal") or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person relating to an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal; (ii) the
Company will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing and will take the necessary steps to
inform the individuals or entities referred to above of the obligations
undertaken in the Merger Agreement; and (iii) the Company will notify
EastGroup immediately if any such inquiries or proposals are received by, any
such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, the Company and such
notification will include the specific details with respect to any such
inquiries, proposals, requests, negotiations or discussions.
Notwithstanding anything set forth in the Merger Agreement to the contrary
(i) the Board of Trustees of the Company may furnish information to or enter
into discussions or negotiations with any person or entity that makes an
unsolicited bona fide Acquisition Proposal, if, and only to the extent that,
the Board of Trustees of the Company, after consultation with and based upon
the advice of Preuss Walker & Shanagher, LLP or another nationally recognized
law firm selected by the Board of Trustees of the Company, determines in good
faith that such action is required for the Board of Trustees to comply with
its fiduciary duties to shareholders under applicable law, provided that prior
to furnishing such information to, or entering into discussions or
negotiations with, such person or entity, the Company provides written notice
to EastGroup to the effect that it is furnishing information to, or entering
into discussions or negotiations with, such person or entity, and the Company
keeps EastGroup regularly informed of the status of any such discussions or
negotiations; and (ii) the Board of Trustees of the Company may, to the extent
applicable, comply with Rules 14d-9 and 14e-2 promulgated under the Exchange
Act with regard to an Acquisition Proposal.
Indemnification and Insurance. The Merger Agreement provides that in the
event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, including, without
limitation, any such claim, action, suit, proceeding or investigation in which
any person who is now, or has been at any time prior to the date hereof, or
who becomes prior to the Effective Time, a director, trustee, officer,
employee, fiduciary or agent of the Company or any of its subsidiaries (the
"Indemnified Parties") is, or is threatened to be, made a party based in whole
or in part on, or arising in whole or in part out of, or pertaining
26
<PAGE>
to (i) the fact that he, she or it is or was a director, trustee, officer,
employee or agent of the Company or any of its subsidiaries, or is or was
serving at the request of the Company or any of its subsidiaries as a
director, trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; or (ii) the Merger
Agreement or any of the transactions contemplated thereby, whether in any case
asserted or arising before or after the Effective Time, the parties to the
Merger Agreement agreed to cooperate and use their reasonable best efforts to
defend against and respond thereto. The Company shall indemnify and hold
harmless, and after the Effective Time EastGroup shall indemnify and hold
harmless, as and to the full extent permitted by applicable law, each
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including attorneys' fees and expenses), judgments, fines and
amounts paid in settlement in connection with any such threatened or actual
claim, action, suit, proceeding or investigation, and in the event of any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time), (i) the Company, and
EastGroup after the Effective Time, shall promptly pay expenses in advance of
the final disposition of any claim, suit, proceeding or investigation to each
Indemnified Party to the full extent permitted by law; (ii) the Indemnified
Parties may retain counsel satisfactory to them, and the Company, and
EastGroup after the Effective Time, shall pay all fees and expenses of such
counsel for the Indemnified Parties within thirty days after statements
therefor are received; and (iii) the Company and EastGroup will use their
respective reasonable best efforts to assist in the vigorous defense of any
such matter; provided, that neither the Company nor EastGroup shall be liable
for any settlement effected without its prior written consent (which consent
shall not be unreasonably withheld); and provided further that EastGroup shall
have no obligation hereunder to any Indemnified Party when and if a court of
competent jurisdiction shall ultimately determine, and such determination
shall have become final and non-appealable, that indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by
applicable law. Any Indemnified Party wishing to claim indemnification under
the Merger Agreement, upon learning of any such claim, action, suit,
proceeding or investigation, shall notify the Company and, after the Effective
Time, EastGroup, thereof, provided that the failure to so notify shall not
affect the obligations of the Company or EastGroup except to the extent such
failure to notify materially prejudices such party.
EastGroup agreed that all rights to indemnification existing in favor, and
all limitations on the personal liability, of the Indemnified Parties provided
for in the Company's Charter or the Company's Bylaws or the charter or bylaws
or similar organizational documents of any of its subsidiaries as in effect as
of the date of the Merger Agreement with respect to matters occurring prior to
the Effective Time shall survive the Merger and shall continue in full force
and effect for a period of not less than three years from the Effective Time;
provided, however, that all rights to indemnification in respect of any claim
(a "Claim") asserted or made within such period shall continue until the
disposition of such Claim. At or prior to the Effective Time, EastGroup shall
purchase directors' and officers' liability insurance coverage for the
Company's trustees and officers in a form acceptable to the Company which
shall provide such trustees and officers with $10,000,000 of aggregate
coverage for three years following the Effective Time and which shall have a
retention of no more than $250,000. EastGroup may satisfy these obligations
under the Merger Agreement by maintaining in force the Company's present
directors' and officers' liability insurance coverage.
Representations and Warranties. Pursuant to the Merger Agreement, the
Company has made representations and warranties to EastGroup and the Purchaser
with respect to, among other things, its organization, capitalization,
authority relative to the Merger, financial statements, public filings,
conduct of business, employee benefit plans, employment matters, compliance
with laws, tax matters, litigation, environmental matters, material contracts,
brokers' fees and other matters.
Termination; Fees. The Merger Agreement provides that it may be terminated
at any time prior to the Effective Time, whether before or after approval of
the shareholders of the Company:
(i) by mutual consent of the Board of Directors of EastGroup and the
Board of Trustees of the Company;
(ii) by either EastGroup or the Company if the Merger shall not have been
consummated on or before August 31, 1998 (provided the terminating party is
not otherwise in material breach of its representations, warranties or
obligations under the Merger Agreement);
27
<PAGE>
(iii) by the Company if any of the conditions precedent specified in the
Merger Agreement have not been met or waived by the Company at such time as
such condition is no longer capable of satisfaction as long as the Company
is not in breach of the Merger Agreement;
(iv) by EastGroup or the Purchaser if (a) any of the conditions precedent
specified in the Merger Agreement have not been met or waived by EastGroup
at such time as such condition is no longer capable of satisfaction or (b)
there shall not have been a sufficient number of Common Shares and
Preferred Shares tendered pursuant to the Offer in order to satisfy the
Minimum Condition on or before April 30, 1998, as long as EastGroup is not
in breach of the Merger Agreement;
(v) by EastGroup or the Purchaser if either EastGroup or the Purchaser is
entitled to terminate the Offer as a result of the occurrence of (a) the
Board of Trustees of the Company or any committee thereof shall have
withdrawn or modified in a manner adverse to EastGroup or the Purchaser its
approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any takeover proposal or (b) the
Company shall have entered into any agreement with respect to any
Acquisition Proposal in accordance with the Merger Agreement;
(vi) by the Company, if the Board of Trustees of the Company recommends
to the Company's shareholders approval or acceptance of an Acquisition
Proposal in accordance with the Merger Agreement; and
(vii) by the Company, if either EastGroup or the Purchaser is in material
breach of its obligations under the Merger Agreement and such material
breach shall not have been cured by EastGroup or the Purchaser within five
days after EastGroup or the Purchaser receives notice thereof.
If (A) EastGroup terminates the Merger Agreement pursuant to section (v)
above, or pursuant to (ii) above as a result of a willful breach by the
Company; or
(B) the Company terminates the Merger Agreement pursuant to section (vi)
above; or
(C) during the pendency of the Offer a third party announces or proposes an
Acquisition Proposal and EastGroup terminates the Merger Agreement under
(iv)(b) above and the Company thereafter consummates or enters into an
agreement to consummate an Acquisition Proposal (with such third party or
otherwise) within the one year period after such termination of the Merger
Agreement;
then the Company shall pay to EastGroup an amount (the "Termination Amount")
in cash equal to the sum of (i) $2,500,000, plus (ii) EastGroup's reasonable
out-of-pocket costs and expenses in connection with the Merger Agreement and
the transactions contemplated hereby, evidenced by documentation reasonably
acceptable to the Company, in accordance with the provisions of the Merger
Agreement.
In the event that (i) EastGroup or the Purchaser are in material breach of
the Merger Agreement and the Offer or the Merger are not consummated; or (ii)
the Company terminates the Merger Agreement under (vii) above, EastGroup shall
pay to the Company an amount in cash equal to $2,500,000 (the "Damage
Amount"). The parties to the Merger Agreement agreed that in the event
EastGroup or the Purchaser breaches the Merger Agreement, actual damages would
be difficult to determine and that the Damage Amount is a liquidated damage
payment in lieu of such actual damages. Payment of the Damage Amount shall be
the Company's sole and exclusive remedy for any material breach of the Merger
Agreement by EastGroup or the Purchaser; provided, however, that the Company
may elect to seek the remedies described in the next paragraph in which case
the Company's sole and exclusive remedy for any material breach of the Merger
Agreement will be as described below and the Company will waive any and all
rights to collection of the Damage Amount.
The parties to the Merger Agreement agreed that irreparable damage could
occur to the Company in the event that any of the provisions of the Merger
Agreement were not performed in accordance with their specific terms or were
otherwise breached. The parties therefore agreed that the Company shall be
entitled to an injunction or injunctions to prevent breaches of the Merger
Agreement and to enforce specifically the terms and provisions of the Merger
Agreement in any court of the United States or any state having jurisdiction;
provided,
28
<PAGE>
however, that in the event the Company elects to collect or attempt to collect
the Damage Amount from EastGroup or the Purchaser, payment of the Damage
Amount shall be the Company's sole and exclusive remedy for any material
breach of the Merger Agreement by EastGroup or the Purchaser.
Funding. EastGroup has agreed, subject to the terms and conditions of the
Offer, to provide or cause to be provided to the Purchaser on a timely basis
the funds necessary to accept for payment, and pay for, Common Shares and
Preferred Shares that the Purchaser becomes obligated to accept for payment,
and pay for, pursuant to the Offer.
14. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that without
the prior written consent of EastGroup, which consent may be withheld for any
reason, between the date of the Merger Agreement and the Effective Time, the
Company shall not declare, set aside or pay any dividends or distributions
whether in cash or property. Notwithstanding anything to the contrary set
forth in the Merger Agreement, nothing in the Merger Agreement shall prohibit
the Company or any Company subsidiary from taking any action at any time or
from time to time that in the reasonable judgment of the Company is necessary
for the Company to maintain its qualification as a REIT within the meaning of
Sections 856-860 of the Code for any period or portion thereof ending on or
prior to the Effective Time including making dividend or distribution payments
to shareholders; provided, however, that no dividends or distributions
required to avoid the excise tax on undistributed REIT income under Section
4981 of the Code shall be deemed to be necessary for the Company to maintain
its qualification as a REIT within the meaning of Sections 856-860 of the
Code. In addition, the Company may declare, set aside and pay distributions to
its shareholders (i) in an amount not to exceed $0.08 per Common Share and
$0.08 per Preferred Share per calendar quarter which distributions will have
record dates and payment dates substantially similar to such dates in 1997; or
(ii) as required by the Company's Charter. To the extent any dividends or
distributions in excess of $0.08 per Common Share and $0.08 per Preferred
Share per quarter are paid, the Common Share Offer Price, the Preferred Share
Offer Price, the Common Merger Price and the Preferred Merger Price shall be
reduced by the cumulative per share amount of such excess.
Prior to the Effective Time, unless EastGroup has consented to the contrary,
the Company shall take any such actions as may be necessary to maintain the
Company's status as a REIT for any period or portions thereof ending on or
prior to the Effective Time. Following the Effective Time, EastGroup shall use
its best efforts to take any such actions as may be necessary to maintain the
Company's status as a REIT for any period or portion thereof ending on or
prior to the Effective Time.
In addition, prior to the Effective Time, unless EastGroup has consented,
the Company shall not (i) issue any shares of its capital stock, effect any
stock split, reverse stock split, stock dividend, recapitalization or other
similar transaction or (ii) grant, confer or award any option, warrant,
conversion right or other right not existing on the date hereof to acquire any
shares of its capital stock.
In the event of any change in the number of outstanding Common Shares or
Preferred Shares by reason of any stock dividend, stock split,
recapitalization, combination, exchange of shares, merger, consolidation,
reorganization or the like or any other change in the corporate or capital
structure of the Company that would have the effect of diluting EastGroup's
rights hereunder, the number of Optioned Common Shares or the number of
Optioned Preferred Shares and the Per Common Share Price or the Per Preferred
Share Price, respectively, shall be adjusted appropriately so as to restore
EastGroup to its rights hereunder with respect to such option; provided,
however, that nothing in this paragraph shall be construed as permitting the
Company to take any action or enter into any transaction prohibited by the
Merger Agreement.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other term of the
Offer or the Merger Agreement, the Purchaser shall not be required to accept
for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-1(c) under the Exchange Act (relating to the
Purchaser's obligation to pay for or return tendered Common Shares or
Preferred Shares after the termination or withdrawal of the Offer), to pay for
any Common Shares or Preferred Shares tendered pursuant to the Offer unless,
(i) there
29
<PAGE>
shall have been validly tendered and not withdrawn prior to the expiration of
the Offer such number of Common Shares and Preferred Shares that, when added
to Preferred Shares beneficially owned by EastGroup on the date of the Merger
Agreement, will constitute two-thirds of the total number of shares of the
capital stock of the Company entitled to vote on a merger under the Company's
Charter and the GBCL (the "Minimum Condition"); and (ii) any waiting period
under the HSR Act applicable to the purchase of Common Shares and Preferred
Shares pursuant to the Offer shall have expired or been terminated (the "HSR
Condition"). Furthermore, notwithstanding any other term of the Offer or the
Merger Agreement, the Purchaser shall not be required to accept for payment
or, subject as aforesaid, to pay for any Common Shares and Preferred Shares
not theretofore accepted for payment or paid for, and may terminate the Offer
if, at any time on or after the date of the Merger Agreement and before the
acceptance of such shares for payment or the payment therefor, any of the
following conditions exist (other than as a result of any action or inaction
of EastGroup or any of its subsidiaries which constitutes a breach of the
Merger Agreement):
(i) there shall be threatened or pending by any governmental entity any
suit, action or proceeding, (a) challenging the acquisition by EastGroup or
the Purchaser of any Common Shares or Preferred Shares under the Offer,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger or the performance of any of the other transactions contemplated
by the Merger Agreement, or seeking to obtain from the Company, EastGroup
or the Purchaser any damages that are material in relation to the Company
and its subsidiaries taken as a whole; (b) seeking to prohibit or limit the
ownership or operation by the Company, EastGroup or any of their respective
subsidiaries of a material portion of the business or assets of the Company
and its subsidiaries, taken as a whole, or EastGroup and its subsidiaries,
taken as a whole, or to compel the Company or EastGroup to dispose of or
hold separate any material portion of the business or assets of the Company
and its subsidiaries, taken as a whole, or EastGroup and its subsidiaries,
taken as a whole, as a result of the Offer or any of the other transactions
contemplated by the Merger Agreement; (c) seeking to impose material
limitations on the ability of EastGroup or the Purchaser to acquire or
hold, or exercise full rights of ownership of, any Common Shares or
Preferred Shares accepted for payment pursuant to the Offer including,
without limitation, the right to vote such Common Shares and Preferred
Shares on all matters properly presented to the shareholders of the
Company; (d) seeking to prohibit EastGroup or any of its subsidiaries from
effectively controlling in any material respect the business or operations
of the Company and its subsidiaries, taken as a whole; or (e) which
otherwise is reasonably likely to have a material adverse effect on the
business, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole;
(ii) there shall be any statute, rules, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
governmental entity or court, other than the application to the Offer or
the Merger of applicable waiting periods under the HSR Act, that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (a) through (e) of paragraph (i) above;
(iii) (a) the Board of Trustees of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to EastGroup or the
Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any takeover proposal or (b)
the Company shall have entered into any agreement with respect to any
Acquisition Proposal in accordance with the Merger Agreement;
(iv) there shall have occurred (a) any general suspension of trading in,
or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index); (b) any extraordinary or material adverse
change in the financial market or major stock exchange indices in the
United States; (c) any material adverse change in United States currency
exchange rates or a suspension of, or limitation on, the markets therefor;
(d) a declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States; (e) any limitation (whether or not
mandatory) by any governmental entity on, or other event that might
materially affect, the extension of credit by banks or other lending
institutions; or (f) in the case of any of the foregoing existing on the
date of the Merger Agreement, a material acceleration or worsening thereof;
30
<PAGE>
(v) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified as to materiality shall not be true
and correct and any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each
case as of the date of the Merger Agreement and as of the scheduled
Expiration Date of the Offer;
(vi) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement;
(vii) the Merger Agreement shall have been terminated in accordance with
its terms.
The foregoing conditions are for the sole benefit of EastGroup and the
Purchaser and may, subject to the terms of the Merger Agreement, be waived by
EastGroup and the Purchaser in whole or in part at any time and from time to
time in their sole discretion. The failure by EastGroup or the Purchaser at
any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right, the waiver of any such right with respect to particular
facts and circumstances shall not be deemed a waiver with respect to any other
facts and circumstances and each such right shall be deemed an ongoing right
that may be asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS.
General. Except as described in this Section 16, based on a review of
publicly available filings by the Company with the Commission and other
publicly available information concerning the Company, neither EastGroup nor
the Purchaser is aware of any license or regulatory permit that appears to be
material to the business of the Company and that might be adversely affected
by the Purchaser's acquisition of Shares pursuant to the Offer, or of any
approval or other action by any governmental, administrative or regulatory
agency or authority, domestic or foreign, that would be required for the
acquisition or ownership of Shares by the Purchaser pursuant to the Offer.
Should any such approval or other action be required, it is presently
contemplated that such approval or action would be sought, except as described
below under "State Takeover Laws." While the Purchaser does not currently
intend to delay acceptance for payment of Shares tendered pursuant to the
Offer pending the outcome of any such matter, there can be no assurance that
any such approval or other action, if required, would be obtained without
substantial conditions or that adverse consequences would not result to the
Company's business or that certain parts of the Company's business would not
have to be disposed of in the event that such approvals were not obtained or
such other actions were not taken or in order to obtain any such approval or
other action. If certain types of adverse action are taken with respect to the
matters discussed below, the Purchaser may decline to accept for payment or
pay for any Shares tendered. See Section 15.
State Takeover Laws. The Company and certain of its subsidiaries conduct
business in a number of states throughout the United States, some of which
have adopted laws and regulations applicable to offers to acquire shares of
corporations that are incorporated or have substantial assets, shareholders
and/or a principal place of business in such states. The Company is
incorporated under the laws of the State of Missouri. In general, Section
351.459 of the GBCL ("Section 459") prevents an "interested shareholder"
(including a person who is the beneficial owner, directly or indirectly, of
20% or more of a "resident domestic corporation's" outstanding voting stock)
from engaging in a "business combination" (defined to include mergers and
certain other actions) with a Missouri corporation for a period of five years
following the date such person became an interested shareholder. The Company
is not a "resident domestic corporation" for purposes of Section 459 and
therefor Section 459 does not apply to this transaction.
Neither EastGroup nor the Purchaser has determined whether any other state
takeover laws and regulations will by their terms apply to the Offer, and,
except as set forth above, neither EastGroup nor the Purchaser has presently
sought to comply with any state takeover statute or regulation. EastGroup and
the Purchaser reserve the right to challenge the applicability or validity of
any state law or regulation purporting to apply to the Offer or the Merger,
and neither anything in this Offer nor any action taken in connection herewith
is intended as a
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<PAGE>
waiver of such right. In the event it is asserted that one or more state
takeover statutes is applicable to the Offer or the Merger and an appropriate
court does not determine that such statute is inapplicable or invalid as
applied to the Offer or the Merger, EastGroup or the Purchaser might be
required to file certain information with, or to receive approval from, the
relevant state authorities, and the Purchaser might be unable to accept for
payment or pay for Shares tendered pursuant to the Offer, or be delayed in
consummating the Offer.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the U.S. Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. EastGroup and the Purchaser believe that the Purchaser may
acquire Shares pursuant to the Offer and the Merger may be consummated without
notification being given or certain information being furnished to the FTC or
the Antitrust Division pursuant to the HSR Act, and that no waiting period
requirements under the HSR Act are applicable to the Merger. However, there
can be no assurance that the consummation of the Merger will not be delayed by
reason of the HSR Act. At any time before or after consummation of the Merger,
the Antitrust Division or the FTC could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the consummation of the Merger or seeking divestiture of
substantial assets of EastGroup, the Purchaser or the Company. At any time
before or after the Effective Time, any state could take such action under its
own antitrust laws as it deems necessary or desirable. Such action could
include seeking to enjoin the consummation of the Merger or seeking
divestiture of the Company or assets of EastGroup, the Purchaser or the
Company by EastGroup or the Purchaser. Private parties may also seek to take
legal action under antitrust laws under certain circumstances. See Section 15.
17. FEES AND EXPENSES. EastGroup and PaineWebber have entered into an
engagement letter (the "Engagement Letter"), pursuant to which PaineWebber has
agreed to act as financial advisor to EastGroup in connection with the
proposed acquisition transaction with the Company. EastGroup and the Purchaser
have also retained PaineWebber as the exclusive dealer manager in connection
with the Offer and EastGroup, the Purchaser and PaineWebber have entered into
a separate dealer manager agreement (the "Dealer Manager Agreement"). The
Dealer Manager Agreement has been filed as an exhibit to the Schedule 14D-1
described below.
Pursuant to the Engagement Letter, EastGroup has agreed to pay PaineWebber a
transaction fee of $875,000, payable promptly in cash upon the closing of an
acquisition transaction (as defined in the Engagement Letter), including the
Offer. In the event that an acquisition transaction is not consummated under
certain circumstances, PaineWebber will be entitled to 50% of the transaction
fee.
In addition to any fees payable to PaineWebber, EastGroup will reimburse
PaineWebber, upon request made from time to time, for all of its out-of-pocket
expenses incurred in connection with the engagement of PaineWebber, including
the fees, disbursements and other charges of its legal counsel, which expenses
shall not exceed an aggregate of $75,000, without the prior consent of
EastGroup. EastGroup and the Purchaser have agreed to indemnify PaineWebber
against certain liabilities in connection with PaineWebber's engagement,
including certain liabilities under the federal securities laws. PaineWebber
has from time to time, and continues to, render various investment banking and
financial advisory services to EastGroup, for which PaineWebber is paid
customary fees.
The Purchaser has retained Beacon Hill Partners, Inc. to act as the
Information Agent and Harris Trust Company of New York to act as the
Depositary in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telex, telecopy and personal interview
and may request brokers, dealers and other nominee shareholders to forward the
Offer materials to beneficial owners. The Information Agent and the Depositary
will receive $5,000 and $10,000, respectively, for services relating to the
Offer and will be reimbursed for certain out-of-pocket expenses. The Purchaser
and EastGroup have also agreed to indemnify the Information Agent and the
Depositary against certain liabilities and expenses in connection with the
Offer, including certain liabilities under the federal securities laws.
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<PAGE>
Neither EastGroup nor the Purchaser will pay any fees or commissions to any
broker or dealer or any other person (other than to the Information Agent) for
soliciting tenders of Shares pursuant to the Offer. Brokers, dealers,
commercial banks and trust companies will, upon request, be reimbursed by the
Purchaser for customary mailing and handling expenses incurred by them in
forwarding offering materials to their customers.
18. MISCELLANEOUS. The Offer is being made to all holders of Shares. The
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with any such state statute
or seek to have such statute declared inapplicable to the Offer. If, after
such good faith effort, the Purchaser cannot comply with any such state
statute, the Offer will not be made to (nor will tenders be accepted from or
on behalf of) the holders of Shares in such state. In any jurisdiction where
the securities, Blue Sky or other laws require the Offer to be made by a
licensed broker or dealer, the Offer will be deemed to be made on behalf of
the Purchaser by one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
No person has been authorized to give any information or make any
representation on behalf of EastGroup, the Purchaser or the Company not
contained in this Offer to Purchase or in the related Letter of Transmittal
and, if given or made, such information or representation must not be relied
upon as having been authorized.
EastGroup and the Purchaser have filed with the Commission a Tender Offer
Statement on Schedule 14D-1, together with all exhibits thereto, pursuant to
Rule 14d-3 of the General Rules and Regulations under the Exchange Act,
furnishing certain additional information with respect to the Offer. Such
Tender Offer Statement and any amendments thereto, including exhibits, may be
inspected and copies may be obtained from the offices of the Commission in the
manner set forth in Section 8 (except that they will not be available at the
regional offices of the Commission).
EASTGROUP-MERIDIAN, INC.
February 23, 1998
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ANNEX I
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF EASTGROUP PROPERTIES, INC.
The following table sets forth the name, current business address, present
principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of each director and executive
officer of EastGroup Properties, Inc. ("EastGroup"). Each such person is a
citizen of the United States of America. None of the listed persons, during
the past five years, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND FIVE-YEAR
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS EMPLOYMENT HISTORY
---------------------- ------------------------ ----------------------------
<C> <C> <S>
Alexander G. Anagnos.... 122 East 42nd Street, Financial Advisor with
Director 24th Floor W.R. Family
New York, New York 10168 Associates.
H.C. Bailey, Jr......... P.O. Box 22704 President of H.C. Bailey
Director Jackson, Mississippi 39225 Company (real estate
development and
investment).
Harold B. Judell........ One Canal Place, Suite 2600 Senior partner in the
Director 365 Canal Street law firm of Foley &
New Orleans, Louisiana 70130 Judell (municipal bond
attorneys); Vice
President and Treasurer
of Dauphine Orleans
Hotel Corp.
John N. Palmer.......... P.O. Box 2469 Chairman of Mobile
Director Jackson, Mississippi 39225 Telecommunications
Technologies Corp.
David M. Osnos.......... 1050 Connecticut Avenue, N.W. Partner in the law firm
Director Washington, D.C. 20036 of Arent, Fox,
Kintner, Plotkin & Kahn.
Leland R. Speed......... 300 One Jackson Place Chairman of the Board of
Director and Chairman 188 East Capitol Street EastGroup and Parkway
of the Board Jackson, Mississippi 39201 Properties, Inc.
("Parkway"); Chief
Executive Officer of
EastGroup and Parkway
until 1997; Chief
Executive Officer of LNH
REIT, Inc. ("LNH") until
1996; Chief Executive
Officer of Eastover
Corporation
("Eastover"), Congress
Street Properties, Inc.
("Congress Street") and
Rockwood National
Corporation ("Rockwood")
until 1994, and EB, Inc.
("EB") until 1995.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
OR EMPLOYMENT AND FIVE-YEAR
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS EMPLOYMENT HISTORY
---------------------- ------------------------ ----------------------------
<C> <C> <S>
David H. Hoster II...... 300 One Jackson Place Chief Executive Officer of
President, Chief 188 East Capitol Street EastGroup since 1997,
Executive Jackson, Mississippi President of EastGroup since
Officer and Director 39201 1993 and Executive Vice
President of EastGroup until
1993; President of LNH from
1995 to 1996 and its Executive
Vice President from 1992 to
1995; Executive Vice President
of Congress Street, Eastover,
The Parkway Company
(predecessor to Parkway), and
Rockwood from 1988 to 1994,
Citizens Growth Properties
from 1988 to 1993 and EB from
1993 to 1994.
N. Keith McKey.......... 300 One Jackson Place Executive Vice President of
Executive Vice 188 East Capitol Street EastGroup since 1993, Chief
President, Jackson, Mississippi Financial Officer and
Chief Financial 39201 Secretary since 1992 and
Officer, Treasurer since 1997; Senior
Treasurer and Secretary Vice President of LNH from
1992 until 1996; Senior Vice
President of Congress Street,
Eastover, EB, Parkway and
Rockwood until 1994.
Diane W. Hayman......... 300 One Jackson Place Controller of EastGroup.
Controller 188 East Capitol Street
Jackson, Mississippi
39201
Marshall A. Loeb........ 300 One Jackson Place Vice President of EastGroup
Vice President 188 East Capitol Street since 1995; Asset Manager of
Jackson, Mississippi EastGroup and Parkway from
39201 1992 to 1995.
Jann W. Puckett......... 300 One Jackson Place Vice President of EastGroup
Vice President 188 East Capitol Street since 1995; Asset Manager of
Jackson, Mississippi EastGroup and Parkway from
39201 1992 to 1995.
Stewart R. Speed........ 300 One Jackson Place Vice President of EastGroup
Vice President 188 East Capitol Street since 1997; Vice President of
Jackson, Mississippi Merry Land & Investment (an
39201 apartment REIT) from 1993 to
1997; Asset Manager of GE
Capital (real estate finance)
from 1991 to 1993.
</TABLE>
I-2
<PAGE>
ANNEX II
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF EASTGROUP-MERIDIAN, INC.
The following table sets forth the name, current business address, present
principal occupation or employment, and material occupations, positions,
offices or employment for the past five years of each director and executive
officer of EastGroup-Meridian, Inc. (the "Purchaser"). Each such person is a
citizen of the United States of America. None of the listed persons, during
the past five years, has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or was a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction as a
result of which such person was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting activities subject to,
federal or state securities laws or finding any violation of such laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT AND FIVE-YEAR
NAME AND POSITION HELD CURRENT BUSINESS ADDRESS EMPLOYMENT HISTORY
---------------------- ------------------------ -------------------------------
<C> <C> <S>
Leland R. Speed......... 300 One Jackson Place Chairman of the Board of
Director and Chairman 188 East Capitol Street EastGroup Properties, Inc.
of the Board Jackson, Mississippi ("EastGroup") and Parkway
39201 Properties, Inc. ("Parkway");
Chief Executive Officer of
EastGroup and Parkway until
1997; Chief Executive Officer
of LNH REIT, Inc. ("LNH") until
1996; Chief Executive Officer
of Eastover Corporation
("Eastover"), Congress Street
Properties, Inc. ("Congress
Street") and Rockwood National
Corporation ("Rockwood") until
1994, and EB, Inc. ("EB") until
1995.
David H. Hoster II...... 300 One Jackson Place Chief Executive Officer of
Director, President and 188 East Capitol Street EastGroup since 1997, President
Chief Executive Officer Jackson, Mississippi of EastGroup since 1993 and
39201 Executive Vice President of
EastGroup until 1993; President
of LNH from 1995 to 1996 and
its Executive Vice President
from 1992 to 1995; Executive
Vice President of Congress
Street, Eastover, The Parkway
Company (predecessor to
Parkway), and Rockwood from
1988 to 1994, Citizens Growth
Properties from 1988 to 1993
and EB from 1993 to 1994.
N. Keith McKey.......... 300 One Jackson Place Executive Vice President of
Director, Vice 188 East Capitol Street EastGroup since 1993, Chief
President, Treasurer Jackson, Mississippi Financial Officer and Secretary
and Secretary 39201 since 1992 and Treasurer since
1997; Senior Vice President of
LNH from 1992 until 1996;
Senior Vice President of
Congress Street, Eastover, EB,
Parkway and Rockwood until
1994.
</TABLE>
II-1
<PAGE>
ANNEX III
RECENT TRANSACTIONS IN THE SHARES
During the 60 days prior to the date of the Offer, EastGroup made the
following purchases of Preferred Shares in open market transactions effected on
AMEX.
<TABLE>
<CAPTION>
DATE OF PURCHASE NUMBER OF PREFERRED SHARES PRICE PER PREFERRED SHARE (1)
---------------- -------------------------- -----------------------------
<S> <C> <C>
1/14/98............ 3,000 $9.035
1/14/98............ 2,000 9.095
1/14/98............ 2,000 9.165
1/23/98............ 2,900 9.285
1/26/98............ 4,200 9.535
1/27/98............ 5,000 9.41
1/29/98............ 500 9.41
</TABLE>
- --------
(1) Price per Preferred Share includes brokerage commissions.
III-1
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. Letters of Transmittal and certificates for Shares should be sent or
delivered by each shareholder of the Company or his or her broker, dealer,
commercial bank or trust company to the Depositary at one of its addresses set
forth below:
The Depositary for the Offer is:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand/Overnight
Wall Street Station Delivery:
P.O. Box 1023 Receive Window
New York, New York 10268-1023 Wall Street Plaza
88 Pine Street, 19th
Floor
New York, New York 10005
By Facsimile:
(212) 701-7636
Confirm by Telephone:
(212) 701-7624
Any questions or requests for assistance may be directed to the Information
Agent at its address and telephone numbers set forth below. Requests for
additional copies of this Offer to Purchase and the Letter of Transmittal may
be directed to the Information Agent or the Depositary. Shareholders may also
contact their brokers, dealers, commercial banks or trust companies for
assistance concerning the Offer.
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
TOLLFREE: (800) 755-5001
OR
BANK AND BROKERAGE FIRMS PLEASE CALL:
(212) 843-8500
The Dealer Manager for the Offer is:
PAINEWEBBER INCORPORATED
1285 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER COMMON SHARES AND PREFERRED SHARES
OF
MERIDIAN POINT REALTY TRUST VIII CO.
PURSUANT TO THE OFFER TO PURCHASE DATED FEBRUARY 23, 1998
OF
EASTGROUP-MERIDIAN, INC.
A WHOLLY-OWNED SUBSIDIARY OF
EASTGROUP PROPERTIES, INC.
- -
- -
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON FRIDAY, MARCH 20, 1998, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
By Mail: By Hand/Overnight By Facsimile:
Wall Street Station Delivery: (212) 701-7636
Receive Window
P.O. Box 1023
New York, New York Wall Street Plaza Confirm by Telephone:
10268-1023 88 Pine Street, 19th (212) 701-7624
Floor
New York, New York
10005
---------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE DOES
NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS LETTER OF TRANSMITTAL IN
THE APPROPRIATE SPACE THEREFOR PROVIDED BELOW AND COMPLETE THE SUBSTITUTE FORM
W-9 SET FORTH BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders either if
certificates representing Shares (as defined below) are to be forwarded
herewith or, unless an Agent's Message (as defined in Instruction 2) is
utilized, if delivery is to be made by book-entry transfer to the account
maintained by the Depositary at The Depository Trust Company (the "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 2 of the
Offer to Purchase. Shareholders whose certificates are not immediately
available, or who cannot deliver their certificates or confirmation of the
book-entry transfer of their Shares into the Depositary's account at the Book-
Entry Transfer Facility ("Book-Entry Confirmation") and all other documents
required hereby to the Depositary on or prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase), must tender their Shares
according to the guaranteed delivery procedures set forth in Section 2 of the
Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE DEPOSITARY AT THE BOOK-
ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: _______________________________________
Account Number: ______________________________________________________
Transaction Code Number: _____________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s): _________________________________________
Date of Execution of Notice of Guaranteed Delivery: ______________________
Name of Institution that Guaranteed Delivery: ____________________________
If Delivered by Book-Entry Transfer:
Name of Tendering Institution: ___________________________________________
Account Number: __________________________________________________________
Transaction Code Number: _________________________________________________
DESCRIPTION OF SHARES TENDERED
CERTIFICATE(S) TENDERED
(ATTACH ADDITIONAL LISTS IF NECESSARY)
- -------------------------------------------------------------------------------
TOTAL NUMBER OF COMMON SHARES REPRESENTED:
- -------------------------------------------------------------------------------
TOTAL NUMBER OF PREFERRED SHARES REPRESENTED:
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CERTIFICATE COMMON SHARE PREFERRED SHARES
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) NUMBER(S)* CERTIFICATES CERTIFICATES
(PLEASE FILL IN, IF BLANK) TENDERED** TENDERED**
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares
represented by any certificates delivered to the Depositary are being
tendered hereby. See Instruction 4.
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates representing
Shares tendered hereby. The certificates and number of Shares that the
undersigned wishes to tender should be indicated in the appropriate boxes.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to EastGroup-Meridian, Inc., a Missouri
corporation (the "Purchaser") and a wholly-owned subsidiary of EastGroup
Properties, Inc., a Maryland corporation ("EastGroup"), the above-described
common shares, par value $0.001 per share (the "Common Shares"), and preferred
shares, par value $0.001 per share (the "Preferred Shares") (collectively, the
Common Shares and the Preferred Shares are referred to as the "Shares"), of
Meridian Point Realty Trust VIII Co., a Missouri corporation (the "Company"),
pursuant to the Purchaser's offer to purchase all of the outstanding Common
Shares at a price of $8.50 per share, net to the tendering shareholder in
cash, and all of the outstanding Preferred Shares at a price of $10.00 per
share, net to the tendering shareholder in cash, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated February 23, 1998
(the "Offer to Purchase"), receipt of which is hereby acknowledged, and in
this Letter of Transmittal (which together constitute the "Offer"). The
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to EastGroup or to one or more affiliates of EastGroup, the
right to purchase Shares tendered pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer, the undersigned hereby sells, assigns, and transfers
to, or upon the order of, the Purchaser all right, title and interest in and
to all of the Shares that are being tendered hereby (and any and all other
Shares or other securities or rights issued, issuable, which detach from or
become exercisable in respect thereof on or after February 23, 1998) and
irrevocably appoints the Depositary the true and lawful agent and attorney-in-
fact of the undersigned with respect to such Shares (and any such other Shares
or securities or rights), with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(i) deliver certificates representing such Shares (and any such other Shares
or securities or rights), or transfer ownership of such Shares (and any such
other Shares or securities or rights) on the account books maintained by the
Book-Entry Transfer Facility, together in either such case with all
accompanying evidences of transfer and authenticity, to or upon the order of
the Purchaser upon receipt by the Depositary, as the undersigned's agent, of
the purchase price (adjusted, if appropriate, as provided in the Offer to
Purchase); (ii) present such Shares (and any such other Shares or securities
or rights) for registration and transfer on the books of the Company; and
(iii) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares (and any such other Shares or securities or rights),
all in accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints David H. Hoster II and N. Keith
McKey and each of them or any other designee of the Purchaser, the attorneys
and proxies of the undersigned, each with full power of substitution, to vote
in such manner as each such attorney and proxy or his substitute shall, in his
sole discretion, deem proper, and otherwise act (including pursuant to written
consent) with respect to all the Shares tendered hereby which have been
accepted for payment by the Purchaser prior to the time of such vote or action
(and any and all other Shares or securities or rights issued, issuable, which
detach from or become exercisable in respect thereof on or after February 23,
1998), which the undersigned is entitled to vote at any meeting of
shareholders (whether annual or special and whether or not an adjourned
meeting) of the Company, or consent in lieu of any such meeting, or otherwise.
This proxy and power of attorney is coupled with an interest in the Shares
tendered hereby and is irrevocable and is granted in consideration of, and is
effective upon, the acceptance for payment of such Shares (and any such other
Shares or securities or rights) by the Purchaser in accordance with the terms
of the Offer. Such acceptance for payment shall revoke all prior proxies
granted by the undersigned at any time with respect to such Shares (and any
such other Shares or securities or rights) and no subsequent proxies will be
given (and if given will be deemed not to be effective) with respect thereto
by the undersigned. The undersigned acknowledges that in order for Shares to
be deemed validly tendered, immediately upon the acceptance for payment of
such Shares, the Purchaser or the Purchaser's designee must be able to
exercise full voting and other rights of a record and beneficial holder with
respect to such Shares.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby (and any and all other Shares or securities or rights issued, issuable,
which detach from or become exercisable in respect thereof on or after
February 23, 1998), and that, when the same are accepted for payment by the
Purchaser, the Purchaser will acquire good and unencumbered title thereto,
free and clear of all liens,
3
<PAGE>
restrictions, charges and encumbrances and the same will not be subject to any
adverse claim. The undersigned, upon request, will execute and deliver any
additional documents deemed by the Depositary or the Purchaser to be necessary
or desirable to complete the sale, assignment and transfer of the Shares
tendered hereby (and any such other Shares or securities or rights).
No authority herein conferred or agreed to be conferred in this Letter of
Transmittal shall be affected by, and all such authority shall survive, the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned. Except as stated
in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the
undersigned and the Purchaser upon the terms and subject to the conditions of
the Offer.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Purchaser may not be required to accept for payment
any of the Shares tendered hereby.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates
representing Shares not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered."
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the check for the purchase price and/or return any certificates
representing Shares not tendered or accepted for payment (and accompanying
documents, as appropriate) to the registered holder(s) appearing under
"Description of Shares Tendered" at the address shown below such registered
holder(s) name(s). In the event that either or both the Special Delivery
Instructions and the Special Payment Instructions are completed, please issue
the check for the purchase price and/or return any certificates representing
Shares not tendered or accepted for payment in the name(s) of, and deliver
such check and/or return such certificates to, the person or persons so
indicated. Shareholders tendering Shares by book entry transfer may request
that any Shares not accepted for payment be returned by crediting such account
maintained at the Book-Entry Transfer Facility as such shareholder may
designate by making an appropriate entry under "Special Payment Instructions."
The undersigned recognizes that the Purchaser has no obligation pursuant to
the Special Payment Instructions to transfer any Shares from the name of the
registered holder(s) thereof if the Purchaser does not accept for payment any
of the Shares so tendered hereby.
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates representing Shares not cates representing Shares not
tendered or not purchased and/or tendered or not purchased and/or
the check for the purchase price the check for the purchase price
of Shares purchased are to be is- of Shares purchased are to be
sued in the name of someone other sent to someone other than the
than the undersigned, or if undersigned, or to the under-
Shares tendered by book-entry signed at an address other than
transfer which are not purchased that shown under "Description of
are to be returned by credit to Shares Tendered."
an account maintained at the
Book-Entry Transfer Facility
other than that account desig-
nated above.
Issue check and/or certifi-
cate(s) to:
Name______________________________
Issue check and/or certifi- (PLEASE PRINT)
cate(s) to:
Address __________________________
Name _____________________________ __________________________________
(PLEASE PRINT) __________________________________
Address __________________________ (INCLUDE ZIP CODE)
__________________________________
__________________________________
(INCLUDE ZIP CODE)
__________________________________
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
Credit unpurchased Shares ten-
dered by book-entry transfer to
the Book-Entry Transfer Facility
account set forth below.
Account No.: _____________________
5
<PAGE>
SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIDE)
Signature(s) of Holder(s) of Shares: __________________
Dated: ____________ , 1998
(Must be signed by registered holder(s) exactly as
name(s) appear(s) on stock certificate(s) or on a
security position listing or by person(s) authorized
to become registered holder(s) by certificates and
documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians,
attorneys-in-fact, agents, officers of corporations or
others acting in a fiduciary or representative
capacity, please set forth the full title and see
Instruction 5.)
Name(s): ______________________________________________
(PLEASE PRINT)
Capacity (full title): ________________________________
Address: ______________________________________________
-------------------------------------------------
-------------------------------------------------
(INCLUDE ZIP CODE)
--------------------------
--------------------------
(AREA CODE AND TELEPHONE (TAX IDENTIFICATION OR
NUMBER) SOCIAL SECURITY NUMBER)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
PLACE MEDALLION GUARANTEE IN SPACE BELOW.
Authorized Signature(s): ______________________________
Name: _________________________________________________
(PLEASE PRINT)
Title: ________________________________________________
Name of Firm: _________________________________________
Address: ______________________________________________
-------------------------------------------------
-------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number: _______________________
Dated: ____________, 1998
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee on this Letter of
Transmittal is required (i) if this Letter of Transmittal is signed by the
registered holder(s) of the Shares (which term, for purposes of this document,
shall include any participant in the Book-Entry Transfer Facility whose name
appears on a security position listing as the owner of Shares) tendered
herewith, unless such holder has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on
this Letter of Transmittal; or (ii) if such Shares are tendered for the
account of a firm that is a member in good standing of the Security Transfer
Agent's Medallion Program, the New York Stock Exchange Medallion Signature
Program or the Stock Exchange Medallion Program (each being hereinafter
referred to as an "Eligible Institution"). In all other cases, all signatures
on this Letter of Transmittal must be guaranteed by an Eligible Institution.
See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of
Transmittal is to be completed by shareholders either if certificates
representing Shares are to be forwarded herewith to the Depositary or, unless
an Agent's Message (as defined below) is utilized, if tenders of Shares are to
be made pursuant to the procedures for delivery by book-entry transfer set
forth in Section 2 of the Offer to Purchase. Certificates representing all
physically tendered Shares, or any book-entry confirmation of Shares, as the
case may be, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof), with any required signature guarantees,
or, in connection with a book-entry transfer, an Agent's Message, and any
other documents required by this Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth herein on or prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). If a
shareholder's certificate(s) representing Shares are not immediately available
(or the procedure for the book-entry transfer cannot be completed on a timely
basis) or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date, such shareholder's Shares may nevertheless
be tendered if the procedures for guaranteed delivery set forth in Section 2
of the Offer to Purchase are followed. Pursuant to such procedure, (i) such
tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in
the form provided by the Purchaser, must be received by the Depositary on or
prior to the Expiration Date; and (iii) the certificates representing all
tendered Shares, in proper form for transfer, or Book-Entry Confirmation of
Shares, as the case may be, in each case together with a properly completed
and duly executed Letter of Transmittal (or facsimile thereof), with any
required signature guarantees (or, in connection with a book-entry transfer,
an Agent's Message) and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as provided in Section 2 of the Offer to Purchase. The term
"Agent's Message" means a message transmitted through electronic means by the
Book-Entry Transfer Facility to, and received by, the Depositary and forming a
part of a book-entry confirmation, which states that the Book-Entry Transfer
Facility has received an express acknowledgment from the participant in the
Book-Entry Transfer Facility tendering the Shares that such participant has
received, and agrees to be bound by, this Letter of Transmittal.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, THE CERTIFICATE(S)
REPRESENTING SHARES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY
THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND SOLE RISK OF
THE TENDERING SHAREHOLDER. DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY
RECEIVED BY THE DEPOSITARY. IF SUCH DELIVERY IS BY MAIL, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO INSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted, and no
fractional Shares will be purchased. All tendering shareholders, by execution
of this Letter of Transmittal (or facsimile thereof), waive any right to
receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER SHARES BY
BOOK-ENTRY TRANSFER). If fewer than all the Shares represented by any
certificate submitted are to be tendered, fill in the
7
<PAGE>
number of Shares that are to be tendered in the boxes entitled "Total Number
of Common Shares Represented" and "Total Number of Preferred Shares
Represented." In such case, new certificate(s) representing the remainder of
the Shares that were represented by the old certificate(s) will be sent to the
registered holder(s), unless otherwise provided in the appropriate box on this
Letter of Transmittal, as soon as practicable after the Expiration Date. All
Shares represented by certificate(s) delivered to the Depositary will be
deemed to have been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face(s) of the certificate(s) without alteration, enlargement
or any change whatsoever. If any of the Shares tendered hereby are owned of
record by two or more joint owners, all such owners must sign this Letter of
Transmittal. If any tendered Shares are registered in different names on
several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and tendered hereby, no endorsements of certificates or separate
stock powers are required, unless payment or certificates for Shares not
tendered or accepted for payment are to be issued to a person other than the
registered holder(s). Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificates or stock powers are signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of
a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority so to act must be
submitted.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution, unless the signature is that of an Eligible Institution.
6. STOCK TRANSFER TAXES. Except as set forth in this Instruction 6, the
Purchaser will pay or cause to be paid any stock transfer taxes with respect
to the transfer and sale of purchased Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates representing Shares not tendered or accepted for payment are to
be registered in the name of, any person other than the registered holder, or
if tendered certificates are registered in the name of any person other than
the person(s) signing this Letter of Transmittal, the amount of any stock
transfer taxes (whether imposed on the registered holder or such other person)
payable on account of the transfer to such person will be deducted from the
purchase price, unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check and/or certificates
representing Shares not tendered or accepted for payment are to be issued in
the name of a person other than the signer of this Letter of Transmittal or if
a check is to be sent and/or such certificates are to be returned to someone
other than the signer of this Letter of Transmittal or to an address other
than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed. Shareholders tendering Shares by book-entry transfer may
request that Shares not accepted for payment be credited to such account
maintained at the Book-Entry Transfer Facility as such shareholder may
designate hereon. If no such instructions are given, such Shares not accepted
for payment will be returned by crediting the account at the Book-Entry
Transfer Facility designated above.
8. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary. The shareholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This
Letter of Transmittal and related documents cannot be processed until the
procedures for replacing lost or destroyed certificates have been followed.
9. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser, in whole or in part, at any time and from time to time in the
Purchaser's sole discretion, in the case of any Shares tendered hereby.
8
<PAGE>
10. SUBSTITUTE FORM W-9. The tendering shareholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN"),
generally the shareholder's social security or federal employer identification
number, on Substitute Form W-9, which is provided below, and to certify
whether the shareholder is subject to backup withholding of Federal income
tax. If a tendering shareholder is subject to backup withholding, the
shareholder must cross out item (2) of the Certification box of the Substitute
Form W-9. Failure to provide the information on the Substitute Form W-9 may
subject the tendering shareholder to 31% Federal income tax withholding on the
payment of the purchase price. If the tendering shareholder has not been
issued a TIN and has applied for a number or intends to apply for a number in
the near future, the shareholder should write "Applied For" in the space
provided for the TIN in Part I, and sign and date the Substitute Form W-9. If
"Applied For" is written in Part I and the Depositary is not provided with a
TIN within 60 days, the Depositary will withhold 31% on all payments of the
purchase price until a TIN is provided to the Depositary.
11. FOREIGN HOLDERS. Foreign holders must submit a completed IRS Form W-8 to
avoid backup withholding. IRS Form W-8 may be obtained by contacting the
Depositary at one of the addresses on the face of this Letter of Transmittal.
12. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance
may be directed to the Information Agent at the address set forth below.
Additional copies of the Offer to Purchase, this Letter of Transmittal, the
Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 may be obtained from the
Information Agent at the address set forth below or from your broker, dealer,
commercial bank or trust company.
IMPORTANT: This Letter of Transmittal (or a facsimile thereof), together
with certificates representing Shares or confirmation of book-entry transfer
and all other required documents, or the Notice of Guaranteed Delivery, must
be received by the Depositary on or prior to the Expiration Date.
9
<PAGE>
IMPORTANT TAX INFORMATION
Under federal income tax law, a shareholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with
such shareholder's correct TIN on Substitute Form W-9 below. If such
shareholder is an individual, the TIN is such person's social security number.
The TIN of a resident alien who does not have and is not eligible to obtain a
social security number is such person's IRS individual taxpayer identification
number. If a tendering shareholder is subject to backup withholding, the
shareholder must cross out item (2) of the Certification box on the Substitute
Form W-9. If the Depositary is not provided with the correct TIN, the
shareholder may be subject to a $50 penalty imposed by the Internal Revenue
Service ("IRS"). In addition, payments that are made to such shareholder with
respect to Shares purchased pursuant to the Offer may be subject to backup
withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to backup withholding. In order for a
foreign individual to qualify as an exempt recipient, that shareholder must
submit to the Depositary a properly completed IRS Form W-8, signed under
penalties of perjury, attesting to that individual's exempt status. Such forms
may be obtained from the Depositary. Exempt shareholders, other than foreign
individuals, should furnish their TIN, write "Exempt" on the face of the
Substitute Form W-9 below, and sign, date and return the Substitute Form W-9
to the Depositary. See the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the shareholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained from the IRS.
PURPOSE OF SUBSTITUTE FORM W-9. To prevent backup withholding on payments
that are made to a shareholder with respect to Shares purchased pursuant to
the Offer, the shareholder is required to notify the Depositary of such
shareholder's correct TIN by completing the Substitute Form W-9 below
certifying that the TIN provided on such form is correct (or that such
shareholder is awaiting a TIN) and that (i) such holder is exempt from backup
withholding; (ii) such holder has not been notified by the IRS that such
holder is subject to backup withholding as a result of a failure to report all
interest or dividends; or (iii) the IRS has notified such holder that such
holder is no longer subject to backup withholding (see Part 2 of Substitute
Form W-9).
WHAT NUMBER TO GIVE THE DEPOSITARY. The shareholder is required to give the
Depositary the social security number, individual taxpayer identification
number, or employer identification number of the record owner of the Shares.
If the Shares are in more than one name or are not in the name of the actual
owner, consult the enclosed Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 for additional guidelines on
which number to report. If the tendering shareholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, such shareholder should write "Applied For" in the space provided for
in the TIN in Part 1, and sign and date the Substitute Form W-9. If "Applied
For" is written in Part 1 and the Depositary is not provided with a TIN within
60 days, the Depositary will withhold 31% on all payments of the purchase
price until a TIN is provided to the Depositary.
10
<PAGE>
PAYER'S NAME:
PART 1--PLEASE PROVIDE YOUR
SUBSTITUTE TIN IN THE BOX AT RIGHT AND ----------------------
FORM W-9 CERTIFY BY SIGNING AND Social security number
DATING BELOW.
OR
-------------------------------
Employer identification number
(If awaiting TIN write "Applied For")
PART 2--For Payees exempt from backup withholding, see the
enclosed Taxpayer Identification Number (TIN) Guidelines for
Certification of Taxpayer Identification Number on Substitute
Form W-9 and complete as instructed therein.
CERTIFICATION--UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT:
(1) The number shown on this form is my correct Taxpayer
Identification Number (or a Taxpayer Identification Number
DEPARTMENT OF has not been issued to me) and either (a) I have mailed or
THE TREASURY delivered an application to receive a Taxpayer
INTERNAL REVENUE Identification Number to the appropriate Internal Revenue
SERVICE Service ("IRS") or Social Security Administration office
or (b) I intend to mail or deliver an application in the
near future. I understand that if I do not provide a
Taxpayer Identification Number within sixty (60) days, 31%
of all reportable payments made to me thereafter will be
withheld until I provide a number; and
(2) I am not subject to backup withholding because (a) I am
exempt from backup withholding, (b) I have not been
notified by the IRS that I am subject to backup
withholding as a result of a failure to report all
interest or dividends, or (c) the IRS has notified me that
I am no longer subject to backup withholding.
PAYER'S REQUEST FOR
TAXPAYER
IDENTIFICATION
NUMBER (TIN) AND
CERTIFICATION
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above
if you have been notified by the IRS that you are currently
subject to backup withholding because you have failed to report
all interest and dividends on your tax return. If after being
notified by the IRS that you were subject to backup
withholding, you received another notification from the IRS
that you are no longer subject to backup withholding, do not
cross out item (2). (Also see instructions in the enclosed
Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9).
Name: ________________________________________________________
(please print)
Address: _____________________________________________________
(please print)
______________________________________________________________
Signature: ___________________________________________________
Date: _________ 1998
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
INFORMATION.
11
<PAGE>
The Information Agent for the Offer is:
BEACON HILL PARTNERS, INC.
90 BROAD STREET
NEW YORK, NEW YORK 10004
TOLL FREE: (800) 755-5001
Banks and Brokerage Firms please call:
(212) 843-8500
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES AND PREFERRED SHARES
OF
MERIDIAN POINT REALTY TRUST VIII CO.
AT
$8.50 NET PER COMMON SHARE
AND
$10.00 NET PER PREFERRED SHARE
BY
EASTGROUP-MERIDIAN, INC.
A WHOLLY-OWNED SUBSIDIARY OF
EASTGROUP PROPERTIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY,
MARCH 20, 1998, UNLESS THE OFFER IS EXTENDED.
FEBRUARY 23, 1998
To Brokers, Dealers, Commercial Banks, Trust Companies And Other Nominees:
We have been appointed by EastGroup-Meridian, Inc. (the "Purchaser"), a
Missouri corporation and a wholly-owned subsidiary of EastGroup Properties,
Inc., a Maryland corporation ("EastGroup"), to act as Information Agent in
connection with the Purchaser's offer to purchase all of the outstanding
common shares, par value $0.001 per share (the "Common Shares"), and all of
the outstanding preferred shares, par value $0.001 per share (the "Preferred
Shares") (collectively, the Common Shares and the Preferred Shares are
referred to herein as "Shares"), of Meridian Point Realty Trust VIII Co., a
Missouri corporation (the "Company"), at a price of $8.50 per Common Share,
net to the seller in cash, and $10.00 per Preferred Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer
to Purchase, dated February 23, 1998 (the "Offer to Purchase"), and the
related Letter of Transmittal (which together constitute the "Offer"), copies
of which are enclosed herewith. The Offer is being made in connection with the
Agreement and Plan of Merger, dated as of February 18, 1998, among EastGroup,
the Purchaser and the Company (the "Merger Agreement").
Please furnish copies of the enclosed materials to those of your clients for
whose accounts you hold Shares registered in your name or in the name of your
nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF
COMMON SHARES AND PREFERRED SHARES THAT, WHEN ADDED TO THE PREFERRED SHARES
BENEFICIALLY OWNED BY EASTGROUP ON THE DATE OF THE MERGER AGREEMENT, WILL
CONSTITUTE TWO-THIRDS OF THE TOTAL NUMBER OF OUTSTANDING SHARES OF THE CAPITAL
STOCK OF THE COMPANY ENTITLED TO VOTE ON A MERGER UNDER THE COMPANY'S
CERTIFICATE OF INCORPORATION, AS AMENDED, AND THE MISSOURI GENERAL AND
BUSINESS CORPORATION LAW.
<PAGE>
For your information and for forwarding to your clients, we are enclosing
the following documents:
1. The Offer to Purchase.
2. The Letter of Transmittal to be used by shareholders of the Company in
accepting the Offer. Facsimile copies of the Letter of Transmittal (with
manual signatures) may be used to tender Shares.
3. A letter to shareholders of the Company from Christopher J. Doherty,
Chairman of the Company, together with a Solicitation/Recommendation
Statement on Schedule 14D-9 filed by the Company with the Securities and
Exchange Commission and mailed to the shareholders of the Company.
4. A printed form of letter which may be sent to your clients for whose
account you hold Shares in your name or in the name of your nominee with
space provided for obtaining such clients' instructions with regard to the
Offer.
5. The Notice of Guaranteed Delivery to be used to accept the Offer if
certificates representing Shares are not immediately available or if time
will not permit all required documents to reach the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) or if
the procedures for book-entry transfer cannot be completed on a timely
basis.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
7. A return envelope addressed to Harris Trust Company of New York, as
Depositary.
Your attention is directed to the following:
1. The tender price is $8.50 per Common Share, net to the seller in cash
and $10.00 per Preferred Share, net to the seller in cash.
2. THE BOARD OF TRUSTEES OF THE COMPANY HAS DETERMINED THAT THE OFFER AND
THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE) ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE
MERGER AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE
COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, March 20, 1998, unless the Offer is extended.
4. The Offer is being made for all of the outstanding Shares. The Offer
is conditioned upon, among other things, there being validly tendered and
not withdrawn prior to the expiration of the Offer such number of Common
Shares and Preferred Shares that, when added to the Preferred Shares
beneficially owned by EastGroup on the date of the Merger Agreement, will
constitute two-thirds of the total number of shares of the capital stock of
the Company entitled to vote on a merger under the Company's Certificate of
Incorporation, as amended, and the Missouri General and Business
Corporation Law.
5. Shareholders who tender Shares will not be obligated to pay brokerage
fees, commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by the Purchaser
pursuant to the Offer.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and pay for all Shares
which are validly tendered on or prior to the Expiration Date and not
theretofore withdrawn pursuant to the Offer to Purchase. In all cases, payment
for Shares accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) certificates representing such Shares
(or a timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, pursuant to the
procedures described in Section 2 of the Offer to Purchase); (ii) a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) with
any required signature guarantees (or, in connection with a book-entry
transfer, an Agent's Message (as defined in Section 2 of the Offer to
Purchase)); and (iii) all other documents required by the Letter of
Transmittal.
2
<PAGE>
If holders of Shares wish to tender, but it is impracticable for them to
forward their certificates or other required documents prior to the expiration
of the Offer, a tender may be effected by following the guaranteed delivery
procedures specified under Section 2, "Procedure for Tendering Shares," in the
Offer to Purchase.
The Purchaser will not pay any fees or commissions to any broker or dealer
or to any other person (other than the Information Agent) in connection with
the solicitation of tenders of Shares pursuant to the Offer. The Purchaser
will, however, upon request, reimburse you for customary mailing and handling
expenses incurred by you in forwarding the enclosed materials to your clients.
The Purchaser will pay or cause to be paid any transfer taxes payable on the
transfer of Shares to it, except as otherwise provided in Instruction 6 of the
enclosed Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS WILL
EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, MARCH 20, 1998,
UNLESS THE OFFER IS EXTENDED.
Any inquiries you may have with respect to the Offer should be directed to,
and additional copies of the enclosed materials may be obtained by contacting,
the undersigned toll free at (800) 755-5001. Banks and brokerage firms please
call (212) 843-8500.
Very truly yours,
BEACON HILL PARTNERS, INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY PERSON AS AN AGENT OF THE PURCHASER, EASTGROUP, THE DEPOSITARY OR THE
INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU
OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY
STATEMENTS ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN
THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES AND PREFERRED SHARES
OF
MERIDIAN POINT REALTY TRUST VIII CO.
AT
$8.50 NET PER COMMON SHARE
AND
$10.00 NET PER PREFERRED SHARE
BY
EASTGROUP-MERIDIAN, INC.
A WHOLLY-OWNED SUBSIDIARY OF
EASTGROUP PROPERTIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, MARCH 20, 1998, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase, dated February 23,
1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which
together constitute the "Offer") relating to the offer by EastGroup-Meridian,
Inc., a Missouri corporation (the "Purchaser") and a wholly-owned subsidiary
of EastGroup Properties, Inc., a Maryland corporation ("EastGroup"), to
purchase all of the outstanding common shares par value $0.001 per share (the
"Common Shares"), and all of the outstanding preferred shares, par value
$0.001 per share (the "Preferred Shares") (collectively, the Common Shares and
the Preferred Shares are referred to herein as the "Shares"), of Meridian
Point Realty Trust VIII Co., a Missouri corporation (the "Company"), at a
price of $8.50 per Common Share, net to the seller in cash, and $10.00 per
Preferred Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer. The Offer is being made in connection with
the Agreement and Plan of Merger, dated as of February 18, 1998, among
EastGroup, the Purchaser and the Company (the "Merger Agreement").
WE ARE THE HOLDER OF RECORD OF SHARES FOR YOUR ACCOUNT. A TENDER OF SUCH
SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR
INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR
YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, pursuant to the
terms and conditions set forth in the Offer.
Your attention is directed to the following:
1. The tender price is $8.50 per Common Share, net to you in cash and
$10.00 per Preferred Share, net to you in cash.
2. THE BOARD OF TRUSTEES OF THE COMPANY HAS DETERMINED THAT THE OFFER AND
THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE) ARE FAIR TO, AND IN THE
BEST INTERESTS OF, THE COMPANY AND ITS SHAREHOLDERS, HAS APPROVED THE
MERGER AGREEMENT, THE OFFER AND THE MERGER, AND RECOMMENDS THAT THE
COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO
THE OFFER.
<PAGE>
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Friday, March 20, 1998, unless the Offer is extended.
4. The Offer is being made for all of the outstanding Shares. The Offer
is conditioned upon, among other things, there being validly tendered and
not withdrawn prior to the expiration of the Offer a number of Common
Shares and Preferred Shares that, when added to the Preferred Shares
beneficially owned by EastGroup on the date of the Merger Agreement, will
constitute two-thirds of the total number of shares of the capital stock of
the Company entitled to vote on a merger under the Company's Certificate of
Incorporation, as amended, and the Missouri General and Business
Corporation Law.
5. Shareholders who tender Shares will not be obligated to pay brokerage
fees, commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant
to the Offer.
If you wish to have us tender any or all of your Shares, please complete,
sign and return the instruction form set forth below. An envelope to return
your instructions to us is enclosed. If you authorize the tender of your
Shares, all such Shares will be tendered unless otherwise specified on the
instruction form set forth below. PLEASE FORWARD YOUR INSTRUCTIONS TO US AS
SOON AS POSSIBLE TO ALLOW US AMPLE TIME TO TENDER YOUR SHARES ON YOUR BEHALF
PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements and amendments thereto. The Purchaser is not
aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If the
Purchaser becomes aware of any valid state statute prohibiting the making of
the Offer or the acceptance of Shares pursuant thereto, the Purchaser will
make a good faith effort to comply with any such state statute or seek to have
such statute declared inapplicable to the Offer. If, after such good faith
effort, the Purchaser cannot comply with any such state statute, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
holders of Shares in such state. In any jurisdiction where the securities,
blue sky or other laws require the Offer to be made by a licensed broker or
dealer, the Offer will be deemed to be made on behalf of the Purchaser by one
or more registered brokers or dealers licensed under the laws of such
jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING COMMON SHARES AND PREFERRED SHARES OF
MERIDIAN POINT REALTY TRUST VIII CO.
The undersigned acknowledge(s) receipt of your letter and the enclosed Offer
to Purchase, dated February 23, 1998, and the related Letter of Transmittal
(which together constitute the "Offer") relating to the offer by EastGroup-
Meridian, Inc. (the "Purchaser"), a Missouri corporation and a wholly-owned
subsidiary of EastGroup Properties, Inc., a Maryland corporation, to purchase
all of the outstanding common shares, par value $0.001 per share (the "Common
Shares"), and all of the outstanding preferred shares, par value $0.001 per
share (the "Preferred Shares") (collectively, the Common Shares and the
Preferred Shares are referred to herein as the "Shares") of Meridian Point
Realty Trust VIII Co., a Missouri corporation, at a price of $8.50 per Common
Share, net to the seller in cash, and $10.00 per Preferred Share, net to the
seller in cash.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) held by you
for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
Number and Type of Shares to be Tendered:*
SIGN HERE
Signature(s): _______________________
__________________Common Shares
Please print name(s) and address(es)
_______________Preferred Shares here:
_____________________________________
_____________________________________
_____________________________________
Account Number:______________________
Area Code and Telephone Number(s):
_____________________________________
_____________________________________
Tax Identification or Social Security Number:
_____________________________________
Dated: , 1998
* Unless otherwise indicated, it will be assumed that all of your Shares held
by us for your account are to be tendered.
3
<PAGE>
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF COMMON SHARES AND PREFERRED SHARES
OF
MERIDIAN POINT REALTY TRUST VIII CO.
TO
EASTGROUP-MERIDIAN, INC.
A WHOLLY-OWNED SUBSIDIARY OF
EASTGROUP PROPERTIES, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This form, or one substantially equivalent hereto, must be used to accept
the Offer (as defined below) if certificates representing common shares, par
value $0.001 per share (the "Common Shares"), or preferred shares, par value
$0.001 per share (the "Preferred Shares") (collectively, the Common Shares and
the Preferred Shares are referred to herein as the "Shares"), of Meridian
Point Realty Trust VIII Co., a Missouri corporation, are not immediately
available (or if the procedure for book-entry transfer cannot be completed on
a timely basis), or if time will not permit all required documents to reach
the Depositary prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase). Such form may be delivered by hand or transmitted by
facsimile transmission or mail to the Depositary. See Section 2 of the Offer
to Purchase.
THE DEPOSITARY FOR THE OFFER IS:
HARRIS TRUST COMPANY OF NEW YORK
<TABLE>
<CAPTION>
By Hand/Overnight
By Mail: Delivery: By Facsimile:
<S> <C> <C>
Wall Street Station Receive Window (212) 701-7636
P.O. Box 1023 Wall Street Plaza Confirm by Telephone:
New York, New York 10268-1023 88 Pine Street, 19th Floor (212) 701-7624
New York, New York 10005
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal or an
Agent's Message (as defined in Section 2 of the Offer to Purchase) and
certificates representing the Shares to the Depositary within the time period
specified herein. Failure to do so could result in a financial loss to the
Eligible Institution.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to EastGroup-Meridian, Inc., a Missouri
corporation and a wholly-owned subsidiary of EastGroup Properties, Inc., a
Maryland corporation, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated February 23, 1998, (the "Offer to Purchase")
and the related Letter of Transmittal (which together constitute the "Offer"),
receipt of which is hereby acknowledged, the number of Shares specified below
pursuant to the guaranteed delivery procedures set forth in Section 2 of the
Offer to Purchase.
Number of Common Shares: _____________________________________________
Number of Preferred Shares: __________________________________________
Certificate No(s). (if available): ___________________________________
Name(s) of Record Holder(s): ________________________________________
(Please Type or Print)
Address(es): _________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
(Zip Code)
[_] CHECK BOX IF SHARES WILL BE TENDERED BY BOOK-ENTRY TRANSFER.
Name of Tendering Institution: _______________________________________
Account Number: ______________________________________________________
Area Code and Telephone: _____________________________________________
Signature(s) : _______________________________________________________
____________________________________________________________
Dated: , 1998
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member in good standing of the Security Transfer Agent's
Medallion Program, the New York Stock Exchange Medallion Signature Program or
the Stock Exchange Medallion Program (each, an "Eligible Institution"), (i)
represents that the above named person(s) own(s) the Shares tendered hereby
within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"); (ii) represents that such tender of
Shares complies with Rule 14e-4 under the Exchange Act; and (iii) guarantees
delivery to the Depositary, at one of its addresses set forth above, of
certificates representing the Shares tendered hereby in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's accounts at The Depository Trust Company, in each case with
delivery of a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) with any required signature guarantees, or an Agent's
Message in the case of a book-entry transfer, and any other required documents,
within three trading days after the date hereof.
Name of Firm: ________________________________________________________________
Address: _____________________________________________________________________
Zip Code: ____________________________________________________________________
Area Code and Telephone Number: ______________________________________________
Authorized Signature: ________________________________________________________
Title: _______________________________________________________________________
NAME: ________________________________________________________________________
(Please Type or Print)
Date: __________________________________________________________________, 1998
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE OF GUARANTEED
DELIVERY. CERTIFICATES REPRESENTING SHARES SHOULD BE SENT WITH YOUR LETTER OF
TRANSMITTAL.
3
<PAGE>
EASTGROUP PROPERTIES, INC.
MERIDIAN POINT REALTY TRUST VIII CO.
- --------------------------------------------------------------------------------
NEWS RELEASE FOR MORE INFORMATION, CONTACT:
- ------------
EASTGROUP PROPERTIES, INC.
David H. Hoster II, President and
Chief Executive Officer
N. Keith McKey, Chief Financial Officer
(601) 354-3555
MERIDIAN POINT REALTY TRUST VIII CO.
Robert H. Gidel, Chief Executive Officer
John E. Castello, Chief Financial Officer
(972) 982-8651
- --------------------------------------------------------------------------------
EASTGROUP PROPERTIES, INC. AND
MERIDIAN POINT REALTY TRUST VIII CO.
ANNOUNCE MERGER AGREEMENT
- --------------------------------------------------------------------------------
JACKSON, MS and SAN FRANCISCO, CA, February 18, 1998--EastGroup Properties,
Inc. (NYSE-EGP) and Meridian Point Realty Trust VIII Co. (ASE-MPH, MPH-pr)
jointly announced today that they have entered into a definitive merger
agreement providing for EastGroup's acquisition of Meridian VIII for $10.00 per
outstanding Preferred Share and $8.50 per outstanding Common Share, payable in
cash. Pursuant to the terms of the Merger Agreement, EastGroup (through a
wholly-owned subsidiary) will promptly commence a tender offer (the "Offer") for
all issued and outstanding Preferred Shares of Meridian VIII not currently held
by EastGroup for $10.00 per share in cash, and for all issued and outstanding
Common Shares of Meridian VIII for $8.50 per share in cash. Following completion
of the Offer, EastGroup and Meridian VIII will engage in a second-step merger in
which all remaining Preferred Shares of Meridian VIII (excluding those held by
EastGroup) will be converted into $10.00 per share in cash and all remaining
Common Shares of Meridian VIII (excluding those held by EastGroup) will be
converted into $8.50 per share in cash. EastGroup will also assume all of
Meridian VIII's outstanding indebtedness, resulting in a total transaction value
of approximately $100 million.
Meridian VIII's Board of Trustees has unanimously approved the Merger
Agreement and recommends that all Preferred and Common Shareholders of Meridian
VIII tender their Shares into the Offer.
"We are exceptionally pleased to announce our acquisition of Meridian VIII,
which will significantly expand our industrial property portfolio in major
sunbelt markets," said David H. Hoster, President and Chief Executive Officer of
EastGroup. "Following the acquisition, our portfolio will include over 70
industrial properties, aggregating nearly 12 million square feet of leasable
space, and three industrial development properties under construction,
aggregating approximately 234,000 square feet."
Hoster continued, "The acquisition of Meridian VIII reflects EastGroup's
strategy to grow through the acquisition of other real estate companies and
REITs, in addition to more traditional property acquisitions. We have been
interested in Meridian VIII for more than two years and have worked to structure
a transaction which is favorable to the shareholders of both companies."
<PAGE>
Commenting on the Merger Agreement, Meridian VIII's Chairman of the Board,
Christopher J. Doherty, said, "After a lengthy process of review, we believe the
Merger Agreement reflects the most favorable strategic alternative available to
Meridian VIII, and allows our shareholders to liquefy their investment at an
attractive price with a minimum of delay."
EastGroup intends to commence the Offer for both Preferred and Common
Shares of Meridian VIII on or about Monday, February 23, 1998, with the filing
and distribution of necessary disclosure materials. The Offer will remain open
for 20 business days, subject to extension under certain circumstances.
EastGroup's obligation to complete the Offer is subject to certain conditions,
which EastGroup may waive at its discretion, including that there shall have
been validly tendered and not withdrawn prior to expiration of the Offer at
least 3,186,354 Preferred Shares and/or Common Shares of Meridian VIII. This
figure reflects the number of Preferred Shares and/or Common Shares which, when
combined with EastGroup's current ownership of 1,469,556 Preferred Shares, would
result in EastGroup owning at least two-thirds of the voting stock of Meridian
VIII. EastGroup's Offer is fully financed through EastGroup's existing line of
credit and is not subject to any financing contingency.
PaineWebber Incorporated has served as EastGroup's financial advisor in
connection with this transaction, Prudential Securities Incorporated has served
as financial advisor to Meridian VIII. EastGroup has retained Beacon Hill
Partners, Inc. and Harris Trust Company of New York as information agent and
depository, respectively, for the Offer.
EastGroup Properties, Inc. is a self-administered equity real estate
investment trust ("REIT") focused on the acquisition, ownership and selective
development of industrial properties in major sunbelt markets throughout the
United States. EastGroup's industrial portfolio currently includes 48
properties, containing over 9.4 million square feet of industrial space, and
three industrial development properties under construction, containing
approximately 234,000 square feet of space.
Meridian Point Realty Trust VIII Company is an equity REIT which owns 25
light industrial properties totaling approximately 2.6 million square feet, and
located in Arizona, Texas, Tennessee, California, Florida and Michigan.
<PAGE>
EXHIBIT (a)(7)
THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER
TO SELL SHARES. THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE, DATED
FEBRUARY 23, 1998, AND THE RELATED LETTER OF TRANSMITTAL AND IS NOT BEING MADE
TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF SHARES IN ANY
JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF WOULD
NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IN ANY JURISDICTION
THE SECURITIES LAWS OF WHICH REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER
OR DEALER, THE OFFER SHALL BE DEEMED MADE ON BEHALF OF THE PURCHASER BY ONE OR
MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTION.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING COMMON SHARES AND PREFERRED SHARES
OF
MERIDIAN POINT REALTY TRUST VIII CO.
AT
$8.50 NET PER COMMON SHARE
AND
$10.00 NET PER PREFERRED SHARE
BY
EASTGROUP-MERIDIAN, INC.
A WHOLLY-OWNED SUBSIDIARY OF
EASTGROUP PROPERTIES, INC.
EastGroup-Meridian, Inc., a Missouri corporation (the "Purchaser"),
and a wholly-owned subsidiary of EastGroup Properties, Inc., a Maryland
corporation ("EastGroup"), is offering to purchase all outstanding common
shares, par value $0.001 per share (the "Common Shares"), and all outstanding
preferred shares, par value $0.001 per
<PAGE>
share (the "Preferred Shares") (collectively, the Common Shares and Preferred
Shares are referred to herein as "Shares"), of Meridian Point Realty Trust VIII
Co., a Missouri corporation (the "Company"), at $8.50 per Common Share, net to
the seller in cash, and $10.00 per Preferred Share, net to the seller in cash
(collectively, the "Offer Price"), upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated February 23, 1998, and in the related
Letter of Transmittal (which together constitute the "Offer"). The Offer is
fully financed through EastGroup's existing lines of credit and is not subject
to any financing contingency.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON FRIDAY, MARCH 20, 1998, UNLESS EXTENDED.
The Offer is conditioned upon, among other things, there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Common Shares and Preferred Shares that when added to the Preferred Shares owned
by the Purchaser on the date of the Merger Agreement (as defined below) will
constitute two-thirds of the total number of shares of the capital stock of the
Company entitled to vote on a merger under the Company's Certificate of
Incorporation, as amended, and the Missouri General and Business Corporation Law
(the "Minimum Condition").
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of February 18, 1998 (the "Merger Agreement"), among EastGroup, the
Purchaser and the Company pursuant to which, following the consummation of the
Offer and the satisfaction or waiver of certain conditions, the Purchaser will
be merged with and into the Company (the "Merger"). At the effective time of
the Merger, each outstanding Share (other than Shares held in the Company's
treasury or by any wholly-owned subsidiary of the Company, or owned by
EastGroup, the Purchaser or any other wholly-owned subsidiary of EastGroup or
held by shareholders, if any, who are entitled to and who properly exercise
dissenters' rights under Missouri law) will be converted into the right to
receive the Offer Price, without interest.
THE BOARD OF TRUSTEES OF THE COMPANY HAS DETERMINED THAT THE OFFER AND
THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND ITS
SHAREHOLDERS, HAS APPROVED THE MERGER AGREEMENT, THE OFFER AND THE MERGER, AND
RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, Shares properly tendered to the
Purchaser and not withdrawn as, if and when the Purchaser gives oral or written
notice to Harris Trust Company of New York (the "Depositary") of the Purchaser's
acceptance for payment of such Shares. Upon the terms and subject to the Offer,
payment for Shares purchased pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting
2
<PAGE>
payment to tendering shareholders. In all cases, payment for Shares purchased
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates for such Shares or timely confirmation of book-entry
transfer of such Shares into the Depositary's account at the Book-Entry Transfer
Facility (as defined in the Offer to Purchase) pursuant to the procedures set
forth in Section 2 of the Offer to Purchase; (ii) a properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees; and (iii) any other documents required by the Letter of
Transmittal. Under no circumstances will interest be paid by the Purchaser on
the purchase price of the Shares, regardless of any delay in making payment for
the Shares.
The term "Expiration Date" means 12:00 Midnight, New York City time,
on Friday, March 20, 1998, unless and until the Purchaser, in its sole
discretion (but subject to the terms of the Merger Agreement), shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date at which the Offer,
as so extended by the Purchaser, shall expire. The Purchaser expressly reserves
the right, in its sole discretion (but subject to the terms of the Merger
Agreement), at any time or from time to time, and regardless of whether or not
any of the events set forth in Section 15 of the Offer to Purchase shall have
occurred or shall have been determined by the Purchaser to have occurred, to
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary. The Purchaser shall not have
any obligation to pay interest on the purchase price for tendered Shares in the
event the Purchaser exercises its right to extend the period of time during
which the Offer is open. There can be no assurance that the Purchaser will
exercise its right to extend the Offer. Any such extension will be followed by a
public announcement thereof no later than 9:00 A.M., New York City time, on the
next business day after the previously scheduled Expiration Date. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering shareholder to
withdraw such shareholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn at any time prior to
12:00 Midnight, New York City time, on Friday, March 20, 1998 (or, if the
Purchaser shall have extended the period of time during which the Offer is open,
the latest time and date at which the Offer, as so extended by the Purchaser,
shall expire) and, unless theretofore accepted for payment and paid for by the
Purchaser pursuant to the Offer, may also be withdrawn at any time on or after
April 30, 1998. For a withdrawal to be effective, a written telegraphic or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase and must specify the name of the person having tendered the Shares to
be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates for Shares have been
delivered or otherwise identified to the Depositary, then, prior to the physical
release of such certificates, the serial numbers shown
3
<PAGE>
on such certificates must be submitted to the Depositary and, unless such Shares
have been tendered by an Eligible Institution (as defined in the Offer to
Purchase), the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedures
for book-entry transfer as set forth in Section 2 of the Offer to Purchase, any
notice of withdrawal must also specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares and
otherwise comply with the Book-Entry Transfer Facility's procedures.
Withdrawals of tenders of Shares may not be rescinded, and any Shares properly
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be retendered by again following one of
the procedures described in Section 2 of the Offer to Purchase at any time prior
to the Expiration Date.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed to record holders of Shares and furnished to
brokers, dealers, banks, trust companies and similar persons whose names, or the
names of whose nominees, appear on the shareholder lists or, if applicable, who
are listed as participants in a clearing agency's security position listing, for
subsequent transmittal to beneficial owners of Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii)
under the Securities Exchange Act of 1934, as amended, is contained in the Offer
to Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase and the Letter of
Transmittal may be directed to the Information Agent as set forth below, and
copies will be furnished promptly at the Purchaser's expense.
THE INFORMATION AGENT FOR THE OFFER IS:
Beacon Hill Partners, Inc.
90 Broad Street
New York, New York 10004
Toll Free: (800) 755-5001
Banks and Brokerage Firms please call:
(212) 843-8500
THE DEALER MANAGER FOR THE OFFER IS:
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York
February 23, 1998
4
<PAGE>
EXHIBIT (a)(8)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.
- -- Social Security numbers have nine digits separated by two hyphens: i.e., 000-
00-0000. Employer identification numbers have nine digits separated by only one
hyphen: i.e., 00-0000000. The table below will help determine the number to give
the payer.
GIVE THE NAME AND SOCIAL
FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF:
1. Individual The individual.
2. Two or more individuals The actual owner of the account or, if
(joint account) combined funds, the first individual on
the account. (1)
3. Custodian account of a The minor. (2)
minor (Uniform Gifts to Minors
Act)
4. (a) The usual revocable The grantor-trustee. (1)
savings trust (grantor is also
trustee)
(b) So-called trust The actual owner. (1)
account that is not
a legal or valid
trust under state law
5. Sole proprietorship The owner. (3)
6. A valid trust, estate or The legal entity. (4)
pension trust
7. Corporate The corporation.
8. Association, club, The organization.
religious, charitable,
educational or other
tax-exempt organization
9. Partnership The partnership.
10. A broker or registered The broker or nominee.
nominee
<PAGE>
GIVE THE NAME AND SOCIAL
FOR THIS TYPE OF ACCOUNT: SECURITY NUMBER OF:
11. Account with the The public entity.
Department of Agriculture in
the name of a public entity
(such as a state or local
government, school district,
or prison) that receives
agricultural program payments
- ---------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your social security
number or employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension
trust. (Do not furnish the identifying number of the personal
representative or trustee unless the legal entity itself is not
designated in the account title.)
NOTE: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number, or Form SS-
4, Application for an Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number. United States resident aliens who cannot obtain a social security
number must apply for an ITIN (Individual Taxpayer Identification Number) on
Form W-7.
2
<PAGE>
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on payments of interest,
dividends and with respect to broker transactions include the following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- The United States or any agency or instrumentality thereof.
- A state, the District of Columbia, a possession of the United States,
or any political subdivision or instrumentality thereof.
- A foreign government, or any a political subdivision, agency or
instrumentality thereof.
- An international organization or any agency or instrumentality
thereof.
- A dealer in securities or commodities required to register in the
United States, the District of Columbia, or a possession of the United
States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a non-exempt trust described
in section 4947.
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section
1441.
- Payments to partnerships not engaged in a trade or business in the
United States and which have at least one nonresident alien partner.
3
<PAGE>
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Payments made to a middleman known in the investment community as a
nominee or who is listed in the most recent publication of the
American Society of Corporate Secretaries, Inc., Nominee List.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. Note: You
may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you
have not provided your correct taxpayer identification number to the
payer.
- Payments of tax-exempt interest (including exempt-interest dividends
under section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a middleman known in the investment community as a
nominee or who is listed in the most recent publication of the
American Society of Corporate Secretaries, Inc., Nominee List.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding.
FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER,
WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE
PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE
FORM.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you
fail to furnish your taxpayer identification number to a payer, you
are subject to a penalty of $50 for each such failure unless your
failure is due to reasonable cause and not to willful neglect.
4
<PAGE>
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If
you make a false statement with no reasonable basis which results in
no imposition of backup withholding, you are subject to a penalty of
$500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties
including fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
5
<PAGE>
EXHIBIT (b)(1)
1997 AMENDED AND RESTATED
PROMISSORY NOTE
$35,000,000.00 Jackson, Mississippi
As of October 1, 1997
FOR VALUE RECEIVED, the undersigned, EASTGROUP PROPERTIES, INC., a Maryland
corporation and successor in interest pursuant to merger to EastGroup
Properties, a Maryland real estate investment trust (hereinafter called the
"Maker"), does hereby promise to pay to the order of DEPOSIT GUARANTY NATIONAL
- ------
BANK, a national banking association chartered under the laws of the United
States of America (hereinafter together with any holder hereof called the
"Holder" or "Bank"), at the office of the Holder at 210 East Capitol Street,
- ------- ----
Jackson, Mississippi 39201, or at such other place as the Holder may designate
in writing, in lawful money of the United States of America, the principal sum
of THIRTY-FIVE MILLION AND NO/100 DOLLARS ($35,000,000.00), together with
interest on the unpaid principal balance, at the rate hereinafter set forth,
calculated on a daily basis and computed on the basis of a year of 360 days and
the actual days elapsed in each month.
Section I. Definitions.
------------
For purposes of this Note, the following terms shall have the meanings set
forth below when used herein:
"Borrowing Base" means, at any particular time, an amount equal to the sum
--------------
of the following: (a) seventy percent (70%) of: (i) (A) with respect to the
real properties owned by an Eligible Entity for six (6) months or more, the Net
Operating Income of each Eligible Entity, divided by (B) .10, plus (ii) with
---------- ----
respect to the real properties owned by an Eligible Entity for less than six (6)
months, the sum of the purchase price plus reasonable closing costs actually
paid by the Eligible Entity for the purchase of such real property, less (b) the
----
amount of all indebtedness secured by any lien encumbering any of the real
properties owned by such Eligible Entity.
"Borrowing Base Report" means a report, in substantially the form of
---------------------
Exhibit A attached hereto, properly completed and certified by an authorized
- ---------
officer of the Borrower and each of the Eligible Entities, as applicable.
"Collateral" means, collectively, the Securities (as defined in the Stock
----------
Pledge Agreement) and all of the Collateral (as defined in the EGP Houston
Partnership Assignment Agreement, the EGP Houston Loan Documents Assignment
Agreement and the EastGroup L.P. Partnership Assignment Agreement), and any and
all other collateral now or hereafter securing the repayment of this Note.
"Deferred Costs" means deferred costs, as determined in accordance with
--------------
<PAGE>
generally accepted accounting principles, and shall include other items
generally defined under generally accepted accounting principles and designated
as goodwill, intangibles, franchises, deferred development costs (excluding,
Depreciation and amortization, but including deferred loan expense, included
therein) and deferred charges.
"Depreciation" means depreciation and amortization expenses and other non-
------------
cash charges (excluding from this calculation any change in deferred taxes, but
including any amortization of Deferred Costs) as determined in accordance with
generally accepted accounting principles.
"Eligible Entity" means, collectively, EGP Virginia, Inc., EGP Houston
---------------
Partners Ltd. and EastGroup Properties, L.P. and any other corporation, limited
partnership, limited liability company or other entity which is owned, directly
or indirectly, entirely by the Borrower and which has been approved by the Bank
in its sole discretion and with respect to which the Bank has received a pledge,
assignment or security interest in all of the ownership and equity interests in
such entity pursuant to a pledge agreement, assignment agreement and/or security
agreement acceptable to the Bank in its sole discretion.
"Eurodollar Rate" shall mean an interest rate equal to the sum of (a) (i)
---------------
from and after the date hereof, through and including March 31, 1998, with
respect to (A) the principal outstanding hereunder up to but not exceeding
$26,250,000.00, 1.5, and (B) the principal outstanding hereunder exceeding
$26,250,000.00, 1.75, and (ii) from and after April 1, 1998, 1.5, plus (b) a
----
rate per annum determined pursuant to the following:
London Interbank Rate
----------------------------------------
100% minus Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" shall mean the reserve requirement
-----------------------------
including any supplemental and emergency reserves (expressed as a percentage)
applicable to member banks of the Federal Reserve System in respect of
"Eurocurrency liabilities" under Regulation D of the Board of Governors of the
Federal Reserve System, or such substituted or amended reserve requirement as
made hereunder applicable to member banks of the Federal Reserve System.
"Interest Period" shall mean, with respect to the London Interbank Rate, a
---------------
period of either thirty (30) or ninety (90) days, as selected by the Maker.
"Interest Rate" shall mean the Prime Rate or the Eurodollar Rate, as
-------------
applicable.
"London Interbank Rate" shall mean, with respect to any Interest Period,
---------------------
the rate of interest per annum published in The Wall Street Journal on the
business day prior to the effective date of the applicable Eurodollar Rate as
the "London Interbank Offered Rate (LIBOR)" for the applicable Interest
-------------------------------------
-2-
<PAGE>
Period. If publication of such rate shall be suspended or terminated, London
Interbank Rate shall mean, with respect of any Interest Period, the rate of
interest per annum determined by the Holder on the business day prior to the
effective date of the applicable Eurodollar Rate to be the rate for the offering
to the Holder in the London Interbank Market of United States dollars for
deposit in immediately available funds for the applicable Interest Period and
for an amount similar to the outstanding principal balance under this Note.
"Material Adverse Effect" means, collectively, any event or condition,
-----------------------
which, in the aggregate with other such events or conditions or individually, in
all cases in the reasonable judgement of the Bank, has or could have a material
adverse effect on (a) (i) the real properties owned by any Eligible Entity or
the value thereof taken as a whole, or (ii) the Collateral taken as a whole, (b)
the business, assets, operations, financial condition or results of operation of
(i) the Borrower and its subsidiaries on a consolidated basis, (ii) any of the
Eligible Entities, or (iii) any other Obligated Party (as hereinafter defined)
or (c) the ability of the Borrower, any of the Eligible Entities or any other
Obligated Party to pay or perform its respective obligations under the Loan
Documents to which it is a party.
"Net Before Tax Income" means net profit before taxes of each Eligible
---------------------
Entity attributable to one or more of the real properties owned by such Eligible
Entity determined in accordance with generally accepted accounting principles.
"Net Operating Income" means, with respect to the real properties owned by
--------------------
an Eligible Entity for six (6) months or more, the sum of (a) Net Before Tax
Income (excluding any net capital gain) of the Eligible Entity for the preceding
six (6) months, plus (b) interest expense for such period attributed to one or
----
more of the real properties of the Eligible Entity in accordance with generally
accepted accounting principles, plus (c) Depreciation and amortization expense
----
for such period attributable to one or more of the real properties of an
Eligible Entity in accordance with generally accepted accounting principles, all
as annualized over a twelve (12) month period.
"Prime Rate" means the annual rate of interest announced by Deposit
----------
Guaranty National Bank from time to time as its "Prime Rate." The Prime Rate is
determined as a means of pricing for customers of Deposit Guaranty National Bank
and is not directly fixed to any external rate of interest or index, nor is it
necessarily the lowest rate of interest charged by Deposit Guaranty National
Bank at any given time for any particular class of customers or credit
extensions. The Prime Rate in effect as of the close of business of each
business day shall be the applicable rate for the day, and for any succeeding
non-business day or days of Deposit Guaranty National Bank. If the Prime Rate
is discontinued as a standard or becomes unascertainable, the Holder shall
designate as a substitute a comparable reference rate.
"Tangible Net Worth" means, for the Maker and its subsidiaries on a
------------------
consolidated basis, determined in accordance with generally accepted accounting
principles, the sum of the following:
-3-
<PAGE>
(a) The issued amount of share capital of all classes of stock, plus
----
(b) The amount of surplus whether capital or earned (or, in the case
of a deficit, minus the amount of such deficit), minus
-----
(c) The unamortized sum of the following (without duplication of
deductions in respect of any item already deducted in arriving at
surplus and retained earnings): (i) treasury stock, plus (ii)
----
discounts and expenses, plus (iii) goodwill, plus (iv) trademarks,
---- ----
plus (v) trade names, plus (vi) patents, plus (vii) Deferred Costs,
---- ---- ----
plus (viii) other intangible assets, plus (ix) any write-up of the
---- ----
value of any assets after [December 31, 1993].
Section II. Rate of Interest and Payments of Principal and Interest.
-------------------------------------------------------
(a) From and after the date hereof, interest shall accrue on the daily
outstanding principal balance of the indebtedness evidenced hereby at an annual
rate of interest equal to the applicable Interest Rate, the selection of the
applicable Interest Rate to be at the Maker's sole option, subject to the
requirement that this Note shall not bear interest at more than one Interest
Rate at any time. The Eurodollar Rate shall be determined and shall take effect
on the date selected by the Maker, and there shall be no adjustment or
modification of such Interest Rate during the applicable Interest Period. The
Prime Rate shall be determined and take effect on the date selected by the Maker
and shall be adjusted from day to day thereafter. In the event of the failure
of the Maker to select an Interest Rate at the end of any applicable Interest
Period, the Borrower shall be deemed to have designated the Eurodollar Rate for
the same Interest Period as the then expiring Interest Period as the applicable
Interest Rate. In the event that any principal shall be outstanding hereunder
and the Maker has not selected an Interest Rate applicable thereto, such
principal shall bear interest at the Prime Rate.
(b) The Maker shall pay to the Holder all accrued and unpaid interest
hereunder commencing on November 5, 1997, and continuing on the 5th day of each
successive month thereafter until payment in full of all indebtedness hereunder.
(c) The entire outstanding principal balance of the indebtedness evidenced
by this Note, together with all accrued and unpaid interest thereon, shall be
due and payable on September 30, 1998 (the "Maturity Date").
-------------
Section III. Late Payment Charge.
--------------------
-4-
<PAGE>
In the event any installment payment of principal and/or interest is more
than fifteen (15) days past due, the Maker promises to pay a late payment charge
of $5.00 or four (4) percent of the amount of the delinquency, whichever is
greater. At its option, and at one or more times, the Holder may, but shall
have no obligation to, debit any deposit account of any Obligor with the Holder
for all or any part of any late payment charges due hereunder.
Section IV. Default Rate.
-------------
The principal or interest amount of any payment which is not paid when due
hereunder (whether at stated maturity, by acceleration or otherwise) shall bear
interest, from the date on which such amount is due until such amount is paid in
full, payable on demand, at a rate per annum equal to the lesser of (i) the
Highest Lawful Rate (as hereinafter defined), or (ii) three percent (3%) plus
the Prime Rate.
Section V. Revolving Credit Facility.
--------------------------
This Note evidences a revolving line of credit by the Holder in favor of
the Maker, and, accordingly, the Maker shall have the right to obtain advances
and readvances of principal hereunder during the term of this Note[, subject to
the provisions of Section VIII], up to a maximum principal amount outstanding at
any one time not to exceed the lesser of (a)(i) from and after the date hereof
through and including March 31, 1998, $35,000,000, and (ii) from and after April
1, 1998, $25,000,000, or (b) the Borrowing Base; provided, however, that the
-------- -------
Holder shall have no obligation to make any further advances hereunder in the
event that an Event of Default (as hereinafter defined) shall have occurred and
be continuing. Such advances and readvances may be made by the Holder without
notice to or consent of any guarantor, surety or other person or entity liable,
whether primarily or secondarily, on this Note and without affecting or
lessening the liability of any such person or entity.
Section VI. Fees.
-----
Prior to the date hereof, the Maker paid to the Holder a facility fee (the
"Facility Fee") for the revolving line of credit evidenced hereby in the amount
------------
of Seventy-Five Thousand and No/100 Dollars ($75,000.00). Commencing on
November 5, 1997, and continuing on the fifth day of each January, April, July
and October thereafter until the repayment in full of all amounts due and owing
under this Note and on the Maturity Date, the Maker shall pay the Holder, in
arrears, an unused line fee (the "Unused Line Fee") on the amount, if any, by
---------------
which the aggregate daily outstanding principal balance of this Note is (a) from
and after the date hereof through and including March 31, 1998, less than
$35,000,000, and (b) from and after April 1, 1998, less than $25,000,000, at the
rate of 0.125% per annum. All such calculations shall be based on a 360-day
year and the actual number of days elapsed to but not including the payment
date.
Section VII. Reduction of Note Amount.
------------------------
-5-
<PAGE>
On April 1, 1998, the Holder's obligation and commitment to make advances
hereunder and the Borrower's right to request advances shall be reduced to
$25,000,000, and thereafter the Holder shall have no obligation or commitment to
make and the Maker shall have no right to obtain advances under this Note in
excess of $25,000,000. On April 1, 1998, the Borrower shall repay to the Bank
all of the outstanding principal balance under this Note in excess of
$25,000,000.
Section VIII. Financial Covenant.
------------------
The Maker covenants and agrees that, as long as there is any amount
outstanding under this Note or any of the other Loan Documents (as hereinafter
defined) or the Holder has any commitment or obligation to make any advances
hereunder, the Maker will at all times maintain a Tangible Net Worth in an
amount not less than $170,000,000.00.
Section IX. Other Covenants.
---------------
The Borrower covenants and agrees, that as long as any of the indebtedness
evidenced by this Note remains outstanding or the Bank's commitment to lend
hereunder remains outstanding, the Borrower will perform and observe, or cause
to be performed or observed, the following positive covenants:
(a) Borrowing Base Report. As soon as available, and in any event within
---------------------
ten (10) days after the end of each calendar quarter and within three (3) days
after any material change to the Borrowing Base or any material adverse change
to any of the properties owned by any Eligible Entity, a complete and updated
Borrowing Base Report.
(b) Notice of Material Adverse Effect. As soon as possible and in any
---------------------------------
event within ten (10) days after the Borrower knows or has reason to know of the
occurrence thereof, written notice of any matter that could have a Material
Adverse Effect.
(c) Quarterly Operating Statements. As soon as available, and in any event
------------------------------
within forty-five (45) days after the end of each March, June and September and
within ninety (90) days after the end of each December, operating statements for
such calendar quarters for each of the real properties owned by an Eligible
Entity, which such operating statements shall correctly and accurately reflect
the operations of each of the real properties owned by an Eligible Entity, shall
set forth separately statements of cash flows for each of such real properties,
shall set forth separately the property included in, the liabilities relating to
and the results of operations of, such real property, and shall be certified as
accurate by the chief financial officer of the Borrower or the Eligible Entity,
as applicable.
Section XI. Events of Default.
-----------------
The occurrence of any one of the following shall constitute an "Event of
--------
Default" under this Note:
- -------
-6-
<PAGE>
(a) The failure of the Maker to pay:
(i) Any installment of principal and/or interest when due
under this Note, unless such failure to pay interest is cured within
ten (10) days;
(ii) The entire outstanding principal of this Note, together
with interest thereon, when due, whether at original maturity, upon
acceleration or otherwise; or
(iii) Any other amount payable under any of the other Loan
Documents (as hereinafter defined) to which the Maker is a party or
any supplement, modification or extension thereof, unless such failure
is cured within ten (10) days after written notice from the Holder to
the Maker.
(b) Any direct or indirect, voluntary or involuntary, mortgage,
pledge, hypothecation, encumbrance, sale, lease, assignment or other
transfer of the Collateral or any portion thereof or interest therein made
or suffered by the Maker, EGP Houston, Inc. EastGroup Properties General
Partners, Inc. or any Eligible Entity, unless made with the prior written
consent of the Holder or expressly permitted by the terms of this Note or
any of the other Loan Documents.
(c) Any representation, warranty or statement made by the Maker, EGP
Houston, Inc., EastGroup Properties General Partners, Inc. or any Eligible
Entity (collectively, the "Obligated Parties") (or any of their respective
-----------------
officers or partners) in any Loan Document or in any certificate, report,
notice or financial statement furnished at any time in connection with this
Note or any other Loan Document shall be breached or shall prove to be
untrue in any material respect on the date as of which the same was made,
which breach or untruth remains uncured for thirty (30) days after written
notice thereof from the Holder to the Maker.
(d) There occurs an event of default or a default which continues
beyond the applicable grace or notice period, if any, under any of the
other Loan Documents or any of the Collateral.
(e) There occurs an Event of Default (as defined therein) under that
certain Loan Agreement, dated as of June 29, 1994, as amended from time to
time, between the Maker and the Holder.
(f) The Maker shall fail to perform, observe or comply with Section
VIII of this Note;
(g) The Maker or any other Obligated Party shall default in the due
performance or observance of any term, covenant or agreement on the Maker's
or such other Obligated Party's part to be performed or observed pursuant
to any of the provisions of this Note or any of the other Loan
-7-
<PAGE>
Documents (other than those referred in Sections IX (a) through (f) hereof)
and such default shall continue for a period of thirty (30) days after
written notice thereof from the Holder to the Maker or such other Obligated
Party, as applicable; provided, however, that if the curing of such default
-------- -------
cannot be accomplished within said period of time, and if the Maker or such
other Obligated Party commences to cure such default promptly after receipt
of notice thereof from the Holder, and thereafter prosecutes the curing of
such default with reasonable diligence, such period of time shall be
extended to a period of time (not to exceed an additional sixty (60) days
in the aggregate) necessary to cure such default with reasonable diligence.
(h) The Maker or any other Obligated Party shall suspend or
discontinue its or his business, or shall make an assignment for the
benefit of creditors or a composition with creditors, shall be unable, or
admit in writing its or his inability, to pay its or his debts as they
mature, shall file a petition in bankruptcy, shall become insolvent
(howsoever such insolvency may be evidenced), shall be adjudicated
insolvent or bankrupt, shall petition or apply to any tribunal for the
appointment of any receiver, liquidator or trustee of or for it or him or
any substantial part of its or his property or assets, shall commence any
proceedings under any bankruptcy, reorganization, arrangement, readjustment
of debt, receivership, dissolution or liquidation law or statute of any
jurisdiction, whether now or hereafter in effect; or there shall be
commenced against the Maker or any other Obligated Party any such
proceeding which shall remain undismissed for a period of sixty (60) days
or more, or any order, judgment or decree approving the petition in any
such proceeding shall be entered; or the Maker or any other Obligated Party
shall by any act or failure to act indicate its or his consent to, approval
of or acquiescence in, any such proceeding or in the appointment of any
receiver, liquidator or trustee of or for it or him or any substantial part
of its or his property or assets, or shall suffer any such appointment to
continue undischarged or unstayed for a period of sixty (60) days or more;
or the Maker or any other Obligated Party shall take any action for the
purpose of effecting any of the foregoing.
(i) The Maker or any other Obligated Party shall fail to pay when due
(and all applicable grace and notice periods with respect thereto shall
have expired) any principal of or interest on any debt (other than under
this Note and the other Loan Documents), or the maturity of any such debt
shall have been accelerated, or any such debt shall have been required to
be prepaid prior to the stated maturity thereof, or any event shall have
occurred that permits (or, with the giving of notice or lapse of time, or
both, would permit) any holder or holders of such debt or any party acting
on behalf of such holder or holders to accelerate the maturity thereof or
require any such prepayment, and any such failure to pay, acceleration or
prepayment could have a Material Adverse Effect on the Maker.
(j) This Note or any other Loan Document shall cease to be in
-8-
<PAGE>
full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the Maker or any
other Obligated Party or any of their respective shareholders, or any lien
or security interest created by the Loan Documents shall for any reason
cease to be a valid, first priority perfected security interest in and lien
upon any of the Collateral (as hereinafter defined) purported to be covered
thereby.
(k) The Maker or any other Obligated Party, or any of their
properties, revenues or assets, shall become the subject of an order of
forfeiture, seizure or divestiture (whether under RICO or otherwise) and
the same shall not have been discharged within thirty (30) days from the
date of entry thereof and such forfeiture, seizure or divestiture could
have a material adverse effect on the Maker or any other Obligated Party or
on the Collateral taken as a whole.
Section XII. General Provisions.
-------------------
This Note is entitled to the benefits and obligations pertaining to (a)
that certain Amended and Restated Stock Pledge Agreement, dated as of June 1,
1996, as amended as of October 1, 1997, among the Maker, the Bank, EastGroup
Virginia, Inc. and EastGroup Houston, Inc. (as amended, modified and
supplemented from time to time, the "Stock Pledge Agreement"), (b) that certain
----------------------
Assignment of Partnership Interests and Security Agreement, dated as of June 1,
1996, as amended as of October 1, 1997, among the Maker, EastGroup Houston, Inc.
and the Bank (as amended, modified and supplemented from time to time, the "EGP
---
Houston Partnership Assignment Agreement"), (c) that certain Assignment and
- ----------------------------------------
Security Agreement, dated as of June 1, 1996, as amended as of October 1, 1997,
between the Maker and the Bank (as amended, modified and supplemented from time
to time, the "EGP Houston Loan Documents Assignment Agreement"), and (d) that
-----------------------------------------------
certain Assignment of Partnership Interests and Security Agreement, dated as of
October 1, 1997, among the Maker, EastGroup Properties General Partners, Inc.
and the Bank (as amended, modified and supplemented from time to time, the
"EastGroup L.P. Partnership Assignment Agreement"), reference to all of which is
- ------------------------------------------------
hereby made, and, unless otherwise defined herein, all capitalized terms used
herein and not defined herein shall have the respective meanings given such
terms therein. If any Event of Default occurs or exists under the this Note, or
if management of the Maker shall be materially changed, then this Note, without
demand or notice of any kind, shall immediately become due and payable. This
Note is secured, inter alia, by the Collateral (this Note, the Stock Pledge
----- ----
Agreement, the EGP Houston Partnership Assignment Agreement, the EGP Houston
Loan Documents Assignment Agreement, the EastGroup L.P. Partnership Assignment
Agreement and the other documents and instruments now or hereafter evidencing or
securing the indebtedness evidenced by this Note, as amended, modified and
supplemented from time to time, being hereinafter collectively referred to as
the "Loan Documents").
--------------
This Note amends and restates that Amended and Restated Promissory Note,
dated as of June 1, 1996, in the amount of $20,000,000 executed by the Maker in
favor of Bank, which amended and restated that Second 1996 Amended and
-9-
<PAGE>
Restated Promissory Note, dated May 30, 1996, in the amount of $7,000,000
executed by the Maker in favor of Bank, which amended and restated that First
1996 Amended and Restated Promissory Note, dated April 30, 1996, in the amount
of $7,000,000 executed by the Maker in favor of Bank, which amended and restated
that Second 1995 Amended and Restated Promissory Note, dated July 12, 1995, in
the amount of $7,000,000 executed by the Maker in favor of Bank, which amended
and restated that 1995 Amended and Restated Promissory Note dated May 1, 1995,
in the amount of $7,000,000 executed by the Maker in favor of Bank, which
amended and restated that Amended and Restated Promissory Note dated April 30,
1994, in the amount of $5,000,000 executed by the Maker in favor of Bank, which
amended and restated that Amended and Restated Promissory Note dated May 31,
1993 in the amount of $5,000,000 executed by the Maker in favor of Bank, which
amended and restated that Amended and Restated Promissory Note dated April 30,
1993 in the amount of $5,000,000 executed by the Maker in favor of Bank, which
amended and restated that Amended and Restated Promissory Note dated May 31,
1992 in the amount of $5,000,000 executed by the Maker in favor of Bank, which
amended and restated that Amended and Restated Promissory Note dated April 30,
1992 in the amount of $5,000,000 executed by the Maker in favor of Bank, which
amended and restated that Amended and Restated Promissory Note dated May 31,
1991, in the amount of $5,000,000, executed by the Maker in favor of Bank, which
amended and restated that Amended and Restated Promissory Note dated April 30,
1991, in the amount of $5,000,000 executed by the Maker in favor of Bank, which
amended and restated that promissory note dated July 5, 1990, in the amount of
$5,000,000 executed by the Maker in favor of Bank, and which is the note
referred to in the Stock Pledge Agreement. This Note is subject to the terms and
conditions, and is entitled to all of the benefits and security, of the Stock
Pledge Agreement, the Partnership Assignment and the Assignment Agreement.
Each payment made hereunder, or any other payment of the indebtedness
evidenced hereby, shall be applied first to the payment of any accrued and
unpaid interest hereunder, and the balance, if any, to the outstanding principal
balance of the indebtedness evidenced by this Note. This Note may be prepaid in
whole or in part at any time without penalty.
It is the intention of the Maker and the Holder to conform strictly to
applicable usury laws. Accordingly, if the applicable rate of interest herein
stated, together with any other finance charges, would exceed the maximum
rate of interest or finance charge which the Maker is allowed to contract for
and agree to pay the Holder or which the Holder may charge, take, reserve,
stipulate, or otherwise receive from the Maker under the laws of the State of
Mississippi or the laws of the United States of America, whichever is applicable
and permits the higher rate ("Highest Lawful Rate"), then, in that event,
-------------------
notwithstanding anything to the contrary herein or in the Loan Documents, it is
agreed that the rate of interest which the unpaid principal balance of this Note
shall bear shall be limited to the Highest Lawful Rate. In the event an
interest payment in excess of the Highest Lawful Rate is inadvertently paid by
the Maker or inadvertently received by the Holder, then such excess sum shall be
credited as a payment of the outstanding principal balance of the indebtedness
evidenced by this Note, unless the Maker shall notify the Holder, in writing,
that the Maker elects to have such excess sum
-10-
<PAGE>
returned to it forthwith. It is the express intent hereof that the Maker not pay
and the Holder not receive, directly or indirectly in any manner whatsoever,
interest in excess of the Highest Lawful Rate.
Notwithstanding anything contained herein to the contrary or contained in
the Agreement or any of the other documents evidencing and securing the
indebtedness evidenced by this Note, if the date on which any payment or
installment is due hereunder falls on a non-business day or a holiday, such
payment or installment shall be payable on the next succeeding business day.
Time is of the essence of this Note, and, in case this Note is collected by
law or through an attorney at law, or under advice therefrom, the Maker agrees
to pay all costs of collection, including reasonable attorneys' fees and
expenses.
The Maker and all endorsers, sureties, guarantors or other parties to this
Note (the "Obligors") severally waive any and all exemption rights which any of
--------
them may have under or by virtue of the constitution or laws of the United
States of America or of any state as against this Note, any renewal thereof, or
any indebtedness represented thereby.
This Note, or any renewal thereof, may be extended or renewed without
notice and without affecting the liability of any Obligor or any security. The
Holder may at its discretion surrender any security without affecting the
liability of any Obligor. All Obligors severally waive protest of this Note,
severally waive all exemptions, appraisements, and rights of redemption in
present or after-acquired property as against the Holder in regard to the
collection thereof, and agree that the liability of each of them shall be joint
and several.
No trustee, beneficiary or officer of the Maker shall have personal
liability, directly or indirectly, under this Note or any other Loan Document,
or under any certification, representation or other instrument delivered in
connection herewith, and the Holder shall have recourse hereunder only against
the Maker (excluding its trustees, beneficiaries and officers) and against the
Collateral, against such additional security as may be furnished by or on behalf
of the Maker in connection herewith and against any and all other assets of the
Maker.
This Note has been executed and delivered in the State of Mississippi and
shall be governed by the laws thereof.
IN WITNESS WHEREOF, the Maker has hereunto executed this instrument on the
dates set forth below their respective signatures below, effective as of the day
and year first above written.
EASTGROUP PROPERTIES, INC.
By: /s/ David H. Hoster II
----------------------------------
Title: President and CEO
---------------------------
Date: October 15, 1997
By: /s/ N. Keith McKey
----------------------------------
Title: CFO
---------------------------
Date: October 15, 1997
-11-
<PAGE>
EXHIBIT (b)(2)
FIRST AMENDED AND RESTATED LOAN AGREEMENT
-----------------------------------------
THIS FIRST AMENDED AND RESTATED LOAN AGREEMENT is made and entered into as of
the 29th day of June, 1994, by and between EASTGROUP PROPERTIES, a Maryland real
estate investment trust (the "Borrower"), and DEPOSIT GUARANTY NATIONAL BANK, a
--------
national banking association (the "Lender").
------
R E C I T A L S:
- - - - - - - -
WHEREAS, the Borrower and the Lender entered into that certain Loan Agreement,
dated as of October 20, 1993 (the "Prior Loan Agreement"), pursuant to which the
--------------------
Lender agreed to make a loan to the Borrower;
WHEREAS, as of the date hereof, the outstanding principal balance under the
Prior Loan Agreement is One Thousand and No/100 Dollars ($1,000.00); and
WHEREAS, the Borrower has requested, and the Lender has agreed, to amend,
modify, renew, extend, increase and restate the Prior Loan Agreement, upon the
terms and conditions hereinafter set forth.
A G R E E M E N T S:
- - - - - - - - - -
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
Section 1.01 Definitions. As used in this Agreement, the following terms
-----------
have the following meanings:
"Acquisition Advances" means, collectively, Advances made by the Lender
--------------------
to the Borrower solely to finance the acquisition by a Property Subsidiary
of an Additional Property.
"Additional Properties" means, collectively, all of the properties now
---------------------
or hereafter approved by the Lender pursuant to Section 5.02 and included
in the calculation of the Borrowing Base, as such properties may be
released from time to time from the liens of the Loan Documents as provided
in Section 4.03.
"Additional Property Inclusion Date" means the date on which an
----------------------------------
Additional Property has been approved by the Lender pursuant to Section
5.02 and is included in the calculation of the Borrowing Base.
"Advance" means an advance of funds by the Lender to the Borrower
-------
pursuant to Article II, including, without limitation, an Acquisition
Advance.
"Advance Request Form" means a certificate, in substantially the form of
--------------------
Exhibit A attached hereto, properly completed and signed by the Borrower
---------
requesting an Advance.
"Affiliate" means a person (other than the Borrower) that directly or
---------
indirectly, through one or more intermediaries, Controls or is Controlled
By or is Under Common Control with any other Person.
"Agreement" means this First Amended and Restated Loan Agreement, as
---------
amended, supplemented or otherwise modified from time to time.
<PAGE>
"Annual Debt Service" means the annual payments of principal and
-------------------
interest for the preceding twelve (12) months required to amortize the
principal indebtedness outstanding under the Note and any other loans to
the Borrower and its Subsidiaries.
"Assigned Agreements" means, collectively, the LakePointe Business Park
-------------------
Loan Documents and the other promissory notes, deeds of trust, mortgages,
deeds to secure debt, assignments of leases and rents, UCC financing
statements and other documents and instruments evidencing and/or securing
loans by the Borrower to the Property Subsidiaries of the proceeds of
certain Advances as required by Section 5.02(h)(ii) and collaterally
assigned to the Lender pursuant to the Assignment Agreement.
"Assigned Notes" means, collectively, the promissory notes, in
--------------
substantially the form of Exhibit B attached hereto, evidencing loans by
the Borrower to the Property Subsidiaries of certain Advances hereunder and
executed and collaterally assigned to the Lender pursuant to Section
5.02(h)(ii).
"Assignment Agreement" means the First Amended and Restated Assignment
--------------------
and Security Agreement of the Borrower in favor of the Lender, in
substantially the form of Exhibit C attached hereto, as the same may be
---------
amended, supplemented or otherwise modified from time to time.
"Assignments of Leases" means, collectively, the First Amended and
---------------------
Restated Assignments of Leases and Rents granted by the Borrower to the
Lender, in substantially the form of Exhibit D attached hereto, as the same
---------
may be amended, supplemented or otherwise modified from time to time,
whereby the Borrower has granted to the Lender a first priority lien on and
security interest in the leases and rents with respect to the LaVista
Apartments, the Pin Oaks Apartments and the Sunchase Apartments.
"Borrower" shall have the meaning given such term in the first
--------
paragraph of this Agreement.
"Borrower Properties" means, collectively, all of the Properties,
-------------------
including Additional Properties, owned by the Borrower.
"Borrower's Account" means Account No. 500-2187764 maintained by the
------------------
Borrower with the Lender.
"Borrowing Base" means, at any particular time, an amount equal to the
--------------
sum of the following: (a) sixty-five percent (65%) of the aggregate
Eligible Appraised Value of the Borrower Properties, plus, with respect
----
each of the Subsidiary Properties, (b) the lesser of (i) sixty-five percent
(65%) of the Eligible Appraised Value of the applicable Subsidiary Property
or (ii) the outstanding principal balance of the Assigned Note secured by
the applicable Subsidiary Property.
"Borrowing Base Report" means a report, in substantially the form of
---------------------
Exhibit E attached hereto, properly completed and certified by an
---------
authorized officer of the Borrower and each of the Property Subsidiaries
owning Properties referred to therein.
"Business Day" means any day on which commercial banks are not
------------
authorized or required to close in Jackson, Mississippi.
"Capitalized Leases" means capital leases and subleases, as defined in
------------------
the Financial Accounting Standards Board Statement of Financial
-2-
<PAGE>
Accounting Standard No. 13, dated November 1976, as amended.
"Change of Control" means any event, circumstance or condition that
-----------------
results in the Borrower ceasing to own, directly or indirectly, one hundred
percent (100%) of any of the Property Subsidiaries.
"Code" means the Internal Revenue Code of 1986 and the regulations
----
promulgated and rulings issued thereunder, as the same may be amended or
supplemented from time to time.
"Collateral" shall have the meaning given such term in Section 4.01.
----------
"Commitment" means the obligation of the Lender to make Advances
----------
hereunder in an aggregate principal amount up to but not exceeding Forty-
Five Million and No/100 Dollars ($45,000,000.00), as such obligation may be
reduced pursuant to Section 2.09.
"Consolidated Debt" means, with respect to the Borrower, the General
-----------------
Partners and their Subsidiaries (which entities, together with the Borrower
and the General Partners shall collectively or individually be referred to
as an "Entity"):
------
(a) All indebtedness for borrowed money which such Entity has
directly or indirectly created, incurred or assumed; and
(b) All indebtedness, whether or not for borrowed money, secured
by any Lien on any property or asset owned or held by such Entity
subject thereto, whether or not the indebtedness secured thereby shall
have been assumed by such Entity; and
(c) Any indebtedness, whether or not for borrowed money, with
respect to which such Entity has become directly or indirectly liable
and which represents or has been incurred to finance the purchase price
(or a portion thereof) of any property or services or business acquired
by such Entity, whether by purchase, consolidation, merger or otherwise
other than any trade payable in the ordinary course of business that is
a current liability under GAAP; and
(d) Any indebtedness of the character referred to in clauses (a),
(b) or (c) of this definition, deemed to be extinguished under GAAP, but
for which such Entity remains legally liable; and
(e) Any indebtedness of any Entity of the character referred to in
clauses (a), (b), (c) or (d) of this definition with respect to which
the Entity has become liable by way of a guaranty;
all as determined in accordance with GAAP; provided, however, that
-------- -------
Consolidated Debt shall not include endorsement of negotiable instruments
for collection in the ordinary course of business nor any portion of a
receivable financing that is not shown on the balance sheet as a liability
pursuant to GAAP.
"Control" or "Controlled By" or "Under Common Control", as used with
------- ------------- --------------------
respect to any Person, means the possession, directly or indirectly,
-3-
<PAGE>
of the power to direct or cause the direction of the management or policies
of such Person (whether through ownership of voting securities, by contract
or otherwise).
"Corporate Property Subsidiaries" means, collectively, the LakePointe
-------------------------------
Business Park Subsidiary and the Property Subsidiaries which are
corporations.
"Debt" means, collectively: (a) all obligations of the Borrower and its
----
Subsidiaries for borrowed money, (b) all obligations of the Borrower and
its Subsidiaries evidenced by bonds, notes, debentures or other similar
instruments, (c) all obligations of the Borrower and its Subsidiaries to
pay the deferred purchase price of property or services, except trade
accounts payable by the Borrower arising in the ordinary course of
business, (d) all obligations of the Borrower and its Subsidiaries under
any Capitalized Leases, (e) all obligations of the Borrower and its
Subsidiaries under guaranties, endorsements (other than for collection or
deposit in the ordinary course of business), assumptions or other
contingent obligations, in respect of, or to purchase or otherwise acquire,
any obligation or indebtedness of the Borrower or any of its Subsidiaries,
or any other obligation, contingent or otherwise, (f) all obligations
secured by a Lien existing on property owned by the Borrower or any of its
Subsidiaries, whether or not the obligations secured thereby have been
assumed by the Borrower or any of its Subsidiaries or are non-recourse to
the credit of the Borrower or any of its Subsidiaries, (g) all
reimbursement obligations of the Borrower or any of its Subsidiaries
(whether contingent or otherwise) in response of letters of credit,
bankers' acceptances, surety or other bonds and similar instruments, and
(h) all liabilities of the Borrower or any of its Subsidiaries in respect
of unfunded vested benefits under any Plan.
"Debt Coverage Ratio" means the ratio of (a) the sum of (i) Net Before
-------------------
Tax Income (excluding any net capital gain) of the Borrower and its
Subsidiaries for the preceding twelve (12) months plus (ii) interest
expense for such period, plus (iii) Depreciation and amortization expense
for such period to (b) Annual Debt Service.
"Debt to Net Worth Ratio" means the ratio of Consolidated Debt to Net
-----------------------
Worth.
"Deed to Secure Debt" means the First Amended and Restated Deed to
-------------------
Secure Debt and Security Agreement granted by the Borrower to the Lender,
in substantially the form of Exhibit F attached hereto, as the same may be
---------
amended, supplemented or otherwise modified from time to time, whereby the
Borrower has granted to the Lender a first priority lien on and security
interest in the LaVista Apartments.
"Deeds of Trust" means, collectively, the First Amended and Restated
--------------
Deeds of Trust and Security Agreements executed by the Borrower to Robert
G. Barnett, as trustee for the benefit of the Lender, in substantially the
form of Exhibit G attached hereto, as the same may be amended, supplemented
---------
or otherwise modified from time to time, whereby the Borrower has granted
to the Lender a first priority lien on and security interest in the Pin
Oaks Apartments and the Sunchase Apartments.
"Default" means any condition or event which, after notice or lapse of
-------
time or both, would constitute an Event of Default.
"Default Rate" means the sum of the Interest Rate plus three (3)
------------ ----
percentage points.
-4-
<PAGE>
"Deferred Costs" means deferred costs, as determined in accordance with
--------------
GAAP, and shall include other items generally defined under GAAP and
designated as goodwill, intangibles, franchises, deferred development costs
(excluding Depreciation and amortization, but including deferred loan
expense, included therein) and deferred charges.
"Depreciation" means depreciation and amortization expenses and other
------------
non-cash charges (excluding from this calculation any change in deferred
taxes, but including any amortization of Deferred Costs) as determined in
accordance with GAAP.
"Dollars" and "$" mean lawful money of the United States of America.
"Eligible Appraised Value" means, with respect to each Property, the
------------------------
market value of such Property as determined in an appraisal prepared by an
independent certified appraiser satisfactory to the Lender, which appraisal
shall be (a) in conformance with all applicable regulations promulgated
pursuant to the Financial Institutions Reform, Recovery and Enforcement Act
of 1989, (b) in form and content acceptable to the Lender and (c) dated no
more than ninety (90) days prior to the date hereof with respect to
Existing Properties and no more than ninety (90) days prior to the
Additional Property Inclusion Date with respect to Additional Properties,
as such market value may be adjusted from time to time by the appraisals
delivered to the Lender pursuant to Section 7.17.
"Environmental Laws" means any and all Federal, state and local laws,
------------------
regulations and requirements pertaining to health, safety or the
environment, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. (S) 9601 et
--
seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. (S)
6901 et seq., the Occupational Safety and Health Act, 29 U.S.C. (S) 651 et
------ --
seq., the Clean Air Act, 42 U.S.C. (S) 7401 et seq., the Clean Water Act,
--- ------
33 U.S.C. (S) 1251 et seq., the Toxic Substances Control Act, 15 U.S.C. (S)
------
2601 et seq., and all similar laws, regulations and requirements of any
------
governmental authority or agency having jurisdiction over the Borrower or
any of its Subsidiaries or any of their properties or assets, as such laws,
regulations and requirements may be amended or supplemented from time to
time.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
-----
the regulations and published interpretations thereunder, as the same may
be amended or supplemented from time to time.
"ERISA Affiliate" means any corporation or trade or business which is a
---------------
member of the same controlled group of corporations (within the meaning of
Section 414(b) of the Code) as the Borrower or is under common control
(within the meaning of Section 414(c) of the Code) with the Borrower.
"Event of Default" shall have the meaning given such term in Section
----------------
9.01.
"Existing Properties" means, collectively, the LaVista Apartments, the
-------------------
Pin Oaks Apartments, the Sunchase Apartments and the LakePointe Business
Park, as such properties may be
-5-
<PAGE>
released from time to time from the liens of the Loan Documents pursuant to
Section 4.03.
"GAAP" means generally accepted accounting principles, applied on a
----
consistent basis, as set forth in Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and/or in
statements of the Financial Accounting Standards Board and/or their
respective successors and which are applicable in the circumstances as of
the date in question. Accounting principles are applied on a "consistent
basis" when the accounting principles observed in a current period are
comparable in all material respects to those accounting principles applied
in a preceding period.
"General Partners" means, in the event that any of the Property
----------------
Subsidiaries are limited partnerships, the general partners of such
Property Subsidiaries.
"Hazardous Substance" means any substance, product, waste, pollutant,
-------------------
material, chemical, contaminant, constituent or other material which is or
becomes listed, regulated or addressed under any Environmental Law,
including, without limitation, asbestos, petroleum and polychlorinated
biphenyls.
"Interest Rate" means at any time, the Prime Rate, plus one-eighth
-------------
(1/8th) percentage point.
"LakePointe Business Park" means the real property and all improvements
------------------------
situated thereon located in Duval County, Florida and known as the
"LakePointe Business Park", together with all of the other property (real
and personal) described in the mortgage and security agreement granted to
the Borrower by the LakePointe Business Park Subsidiary and assigned to the
Lender pursuant to the Assignment Agreement.
"LakePointe Business Park Loan Documents" means, collectively, the
---------------------------------------
Promissory Note, the Mortgage and Security Agreement and the Assignment of
Leases and Rents executed by the LakePointe Business Park Subsidiary and
evidencing and/or securing a loan from the Borrower to the LakePointe
Business Park Subsidiary and collaterally assigned to the Lender pursuant
to the Assignment Agreement, as amended, modified, supplemented and
assigned from time to time.
"LakePointe Business Park Subsidiary" means EastGroup Jacksonville,
-----------------------------------
Inc., a Florida corporation.
"LaVista Apartments" means the real property and all improvements
------------------
situated thereon located in DeKalb County, Georgia and known as the
"LaVista Apartments", together with all of the other property (real and
personal) described in the Deed to Secure Debt.
"Lender" shall have the meaning given such term in the first paragraph
of this Agreement.
"Lien" means any lien, judgment, mortgage, deed of trust, deed to secure
----
debt, security interest, tax lien, financing statement, pledge, charge,
hypothecation, assignment, preference, priority or other encumbrance of any
kind or nature whatsoever (including, without
-6-
<PAGE>
limitation, any conditional sale or title retention agreement), whether arising
by contract, operation of law or otherwise.
"Loan Documents" means, collectively, this Agreement, the Deeds of Trust, the
--------------
Deed to Secure Debt, the Note, the Assignment Agreement, the Assigned
Agreements, the Assignments of Leases, the Partnership Assignments, the Stock
Pledge Agreement, the documents executed and delivered by the Borrower pursuant
to Section 5.02 and all other promissory notes, security agreements, deeds of
trust, mortgages, assignments, guaranties and other instruments, documents and
agreements executed and delivered pursuant to or in connection with this
Agreement, as such instruments, documents and agreements may be amended,
renewed, extended, supplemented, released or otherwise modified from time to
time.
"Material Adverse Effect" means, collectively, any event or condition,
-----------------------
which, in the aggregate with other such events or conditions or individually, in
all cases in the reasonable judgment of the Lender, has or could have a material
adverse effect on (a) (i) any of the Properties, or (ii) on the other Collateral
taken as a whole, (b) the business, assets, operations, financial condition or
results of operation of (i) any of the Property Subsidiaries, or (ii) the
Borrower and its Subsidiaries on a consolidated basis, or (c) the ability of the
Borrower, any of the Property Subsidiaries, any of the General Partners or any
other Obligated Party to pay and perform its respective obligations under the
Loan Documents to which it is a party.
"Monthly Payment Date" means the fifth day of each calendar month.
--------------------
"Multiemployer Plan" means a multiemployer plan defined as such in Section
------------------
3(37) of ERISA to which contributions have been made by the Borrower or any
ERISA Affiliate and which is covered by Title IV of ERISA.
"Net Before Tax Income" means net profit before taxes of the Borrower and its
---------------------
Subsidiaries on a consolidated basis as determined in accordance with GAAP.
"Net Worth" means, at any particular time, all amounts which, in conformity
---------
with GAAP, would be included as stockholders' equity on a consolidated balance
sheet of the Borrower and its Subsidiaries.
"Note" means the first amended and restated promissory note of the Borrower,
----
in substantially the form of Exhibit H attached hereto, and all extensions,
---------
renewals, replacements and other modifications thereof.
"Obligated Party" means any other Person who is or becomes party to any
---------------
agreement that guarantees or secures payment and performance of the Obligations
or any part thereof.
"Obligations" means all obligations, indebtedness and liabilities of each of
-----------
the Borrower, the General Partners and the Property Subsidiaries to the Lender,
now existing or hereafter arising, whether direct, indirect, related, unrelated,
fixed, contingent, liquidated, unliquidated, joint, several or joint and
several, including, without limitation, the obligations, indebtedness and
liabilities of each of the Borrower, and the Property Subsidiaries under this
Agreement, the Assigned Agreements, the LakePointe Business Park Loan Documents
and the other Loan Documents, and all interest accruing thereon and all
attorneys' fees and other expenses incurred in the enforcement or collection
thereof.
-7-
<PAGE>
"Operating Leases" means operating leases, as defined in the Financial
----------------
Accounting Standards Board Statement of Financial Accounting Standards No. 13,
dated November 1976, as amended.
"Participant" means any Person that now or hereafter participates by contract
-----------
directly or indirectly in the rights and/or obligations of the Lender under this
Agreement, the Commitment or any Advances.
"Partnership Assignments" means, collectively, the Assignment of Partnership
-----------------------
Interests and Security Agreements hereafter granted by the Borrower and the
General Partners to the Lender, in substantially the form of Exhibit I attached
---------
hereto, as the same may be amended, supplemented and otherwise modified from
time to time, whereby the Borrower and the General Partners grant to the Lender
a first priority lien on and security interest in all of the limited and general
partnership interests in the Property Subsidiaries which are limited
partnerships.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to all or any of its functions under ERISA.
"Person" means any individual, corporation, business, trust, association,
------
company, partnership, joint venture, governmental authority or other entity.
"Pin Oaks Apartments" means the real property and all improvements situated
-------------------
thereon located in Harris County, Texas and known as the "Pin Oaks Apartments",
together with all of the other property (real and personal) described in the
applicable Deed of Trust.
"Plan" means any employee benefit or other plan established or maintained by
----
the Borrower or any ERISA Affiliate.
"Prime Rate" means the annual rate of interest announced by the Lender from
----------
time to time as its "Prime Rate." The Prime Rate is determined as a means of
pricing the Lender customers and is not directly fixed to any external rate of
interest or index, nor is it necessarily the lowest rate of interest charged by
the Lender at any given time for any particular class of customers or credit
extensions. The Prime Rate in effect as of the close of business of each
Business Day shall be the applicable rate for that day, and for any succeeding
non-business day or days of the Lender. If the Prime Rate is discontinued as a
standard or becomes unascertainable, the Lender shall designate as a substitute
a comparable reference rate.
"Prohibited Transaction" means any transaction set forth in Section 406 of
----------------------
ERISA or Section 4975 of the Code.
"Properties" means, collectively, all of the properties now or hereafter
----------
pledged to the Lender to secure the Obligations and included in the calculation
of the Borrowing Base, including, without limitation, the Existing Properties
and the Additional Properties, as such properties may be released from time to
time from the liens of the Loan Documents pursuant to Section 4.03.
"Property Subsidiary" means a Subsidiary of the Borrower, one hundred
-------------------
percent (100%) of which is owned directly or indirectly
-8-
<PAGE>
by the Borrower, formed for the sole purpose of owning a Subsidiary Property,
including, without limitation, the Corporate Property Subsidiaries.
"Reportable Event" means any of the events set forth in Section 4043 of
----------------
ERISA.
"RICO" means the Racketeer Influenced and Corrupt Organization Act of 1970,
----
as amended from time to time.
"Solvent" means, as to any Person, that such Person has capital sufficient to
-------
carry on its business and transactions and all business and transactions to
which it is about to engage, is able to pay its debts as they mature, and owns
property having a value, both at fair valuation and at present fair saleable
value, greater than the amount required to pay its debts (including
contingencies).
"Stock Pledge Agreement" means the First Amended and Restated Stock Pledge
----------------------
Agreement between the Borrower and the Lender, in substantially the form of
Exhibit J attached hereto, as the same may be amended, supplemented and
- ---------
otherwise modified from time to time, whereby the Borrower grants to the Lender
a first priority lien on and security interest in all of the capital stock of
each of the Corporate Property Subsidiaries.
"Subsidiary" means, collectively, (a) any corporation at least a majority of
----------
whose securities having ordinary voting power for the election of directors
(other than securities for such power only by reason of a happening of a
contingency) are at the time owned, directly or indirectly, by the Borrower or
by any one of its Subsidiaries, and (b) any limited or general partnership at
least a majority of whose limited and/or general partnership interests are at
the time owned, directly or indirectly, by the Borrower or by any of its
Subsidiaries, including, without limitation, the LakePointe Business Park
Subsidiary and the Property Subsidiaries.
"Subsidiary Properties" means, collectively, the LakePointe Business Park and
---------------------
each of the Properties owned or acquired by a Property Subsidiary.
"Sunchase Apartments" means the real property and all improvements situated
-------------------
thereon located in Nueces County, Texas and known as the "Sunchase Apartments",
together with all of the other property (real and personal) described in the
applicable Deed of Trust.
"Tangible Net Worth" means, for the Borrower and its Subsidiaries on a
------------------
consolidated basis, determined in accordance with GAAP, the sum of the
following:
(a) The issued amount of share capital of all classes of stock, plus
----
(b) The amount of surplus whether capital or earned (or, in the case of
a deficit, minus the amount of such deficit), minus
-----
(c) The unamortized sum of the following (without
-9-
<PAGE>
duplication of deductions in respect of any item already deducted in
arriving at surplus and retained earnings): (i) treasury stock, plus
----
(ii) discounts and expenses, plus (iii) goodwill, plus (iv)
---- ----
trademarks, plus (v) trade names, plus (vi) patents, plus (vii)
---- ---- ----
Deferred Costs, plus (viii) other intangible assets, plus (ix) any
---- ----
write-up of the value of any assets after December 31, 1993.
"Termination Date" means April 30, 1997, or such earlier date on which
----------------
the Commitment terminates as provided in this Agreement.
"UCC" means the Uniform Commercial Code, as the same may, from time to
---
time, be in effect in the State of Mississippi; provided, however, in the
-------- -------
event that, by reason of mandatory provisions of law, any or all of the
creation, perfection, priority or enforcement of the Lender's security
interest in any of the Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than the State of Mississippi,
the term "UCC" shall mean the Uniform Commercial Code as in effect in such
other jurisdiction for purposes of the provisions relating to such
creation, attachments, perfection, priority or enforcement and for purposes
of definitions related to such provisions.
Section 1.02 Other Definitional Provisions. All definitions contained in
-----------------------------
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein" and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. Unless otherwise specified, all
Article and Section references pertain to this Agreement. All accounting terms
not specifically defined herein shall be construed in accordance with GAAP,
consistently applied. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
ARTICLE II
Advances
--------
Section 2.01 Advances. Subject to the terms and conditions of this
--------
Agreement, the Lender agrees to make one or more Advances to the Borrower from
time to time from the date hereof to and excluding the Termination Date in an
aggregate amount at any time outstanding not to exceed the lesser of (a) the
Borrowing Base or (b) the Commitment; provided, however, that in the event that
-------- -------
the Borrower fails to repay the Advances to an amount equal to One Thousand and
No/100 Dollars ($1,000.00) on or before May 31, 1996, as provided in Section
2.06, then from and after June 1, 1996, the Borrower shall have no right to
request, and the Lender shall have no obligation to make, any further Advances
hereunder. Subject to the foregoing limitations and the other terms and
provisions of this Agreement, the Borrower may borrow, repay and reborrow
hereunder; provided, however, in no event shall the Borrower at any time reduce
-------- -------
and repay the aggregate outstanding principal balance of all Advances hereunder
to an amount less than One Thousand and No/100 Dollars ($1,000.00).
Section 2.02 The Note. The obligation of the Borrower to repay the
--------
Advances and interest thereon shall be evidenced by, and payable in accordance
with the terms of, the Note executed by the Borrower, dated the date hereof, and
in the principal amount of the Commitment.
Section 2.03 Interest. Subject to Section 2.05, the unpaid principal
--------
amount of the Advances shall bear interest from day to day prior to the
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<PAGE>
Termination Date at a varying rate per annum equal to the Interest Rate, each
such change in the rate of interest charged on the Advances to become effective,
without notice to the Borrower, on the effective date of each change in the
Interest Rate. Interest shall be calculated on the basis of actual days elapsed
and a 360-day year. Accrued and unpaid interest on the Advances shall be due
and payable to the Lender on each Monthly Payment Date and on the Termination
Date.
Section 2.04 Principal, Etc. The Borrower shall pay to the Lender the unpaid
--------------
principal amount of all Advances, together with all accrued and unpaid interest
on the Advances and all other sums due and payable hereunder or under any of the
other Loan Documents, on the Termination Date. In the event that the Borrower
fails to repay the Advances to an amount equal to One Thousand and No/100
Dollars ($1,000.00) on or before May 31, 1996, as provided in Section 2.06, then
the Borrower shall pay to the Lender on December 1, 1996, a principal payment in
an amount sufficient to reduce the aggregate outstanding principal balance of
all of the Advances on December 1, 1996, to an amount not greater than Thirty
Million and No/100 Dollars ($30,000,000.00), together with all accrued and
unpaid interest on the principal so paid.
Section 2.05 Default Rate. From and after the occurrence of an Event of
------------
Default, overdue payments of principal under the Note and (to the extent
permitted by law) interest and other amounts due thereunder, hereunder or under
any of the other Loan Documents shall bear interest, from the date the same
became due and payable and in lieu of the Interest Rate, at the Default Rate,
which interest shall continue to accrue until the obligations of the Borrower in
respect to the payment thereof shall have been discharged (whether before or
after judgment). Notwithstanding anything to the contrary contained in this
Section, in no event shall the rate of interest accruing from and after the
occurrence of an Event of Default exceed the maximum amount allowed by
applicable law.
Section 2.06 Repayment of Principal by May 31, 1996. Notwithstanding
--------------------------------------
anything to the contrary contained herein, in the event that the Borrower has
not repaid and reduced the aggregate outstanding principal balance of all
Advances to an amount equal to One Thousand and No/100 Dollars ($1,000.00) on
any one day from and after an initial Advance under Section 5.01 hereof and on
or before May 31, 1996, then from and after June 1, 1996, and through and until
the Termination Date, the Borrower shall have no right to request, and the
Lender shall have no obligation to make, any further Advances hereunder.
Section 2.07 Requests for Advances.
---------------------
(a) The Borrower shall give the Lender notice by means of an Advance
Request Form of each requested Advance for the Borrower by not later than
11:00 a..m. (Jackson, Mississippi time) on the third Business Day preceding
the requested dated of the Advance, specifying: (i) the requested date of
such Advance (which shall be a Business Day) and (ii) the amount of such
Advance.
(b) The Lender at its option may accept telephonic requests for
Advances, provided that such acceptance shall not constitute a waiver of
the Lender's right to require delivery of an Advance Request Form in
connection with subsequent Advances. Any telephonic request for an Advance
by the Borrower shall be promptly confirmed by submission of a properly
completed Advance Request Form to the Lender.
(c) All requests by the Borrower for an Advance under this Section
shall be irrevocable and any notice under this Section which is received by
the Lender after 11:00 a.m. (Jackson, Mississippi time) shall
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<PAGE>
be deemed to have been received on the next Business Day.
(d) Each Acquisition Advance shall be in an amount not greater than the
lesser of (i) the sum of (A) the purchase price paid by the Property
Subsidiary for such Additional Property, (B) all deposits made by the
Borrower and the Property Subsidiary with respect to such Additional
Property and not refunded, and (C) all other reasonable and legitimate
closing costs actually incurred by the Borrower or the Property Subsidiary
in connection with the closing of the acquisition of such Additional
Property, all of which shall be approved by the Lender, which approval
shall not be unreasonably withheld; or (ii) the market value of such
Additional Property as provided in the appraisal delivered to the Lender
pursuant to Section 5.02(n).
(e) If the proceeds of the Advance will be used by the Borrower to
acquire a property not requested to be included in the Borrowing Base, such
Advance shall be in an amount not greater than the lesser of (i) the sum of
(A) the purchase price paid by the Borrower or its wholly-owned Subsidiary
for such other property, (B) all deposits made by the Borrower or its
wholly-owned Subsidiary with respect to such Property and not refunded, and
(C) all other reasonable and legitimate closing costs actually incurred by
the Borrower or its wholly-owned Subsidiary in connection with the closing
of the acquisition of such other property, all of which shall be approved
by the Lender, which approval shall not be unreasonably withheld; or (ii)
the market value of such other property as provided in the most recent
appraisal of such property prepared by an independent certified appraiser
and approved by the Lender, which approval shall not be unreasonably
withheld.
(f) Notwithstanding anything to the contrary contained herein, the
Lender shall have no obligation to make, and the Borrower shall have no
right to request, more than one Advance with respect to each of the
Additional Properties.
Section 2.08 Advances by the Lender. On the date the requested Advance is
----------------------
to be made as determined pursuant to Section 2.07, the Lender shall make
available to the Borrower by transfer to the Borrower's Account at the beginning
of such Business Day or to such other account as the Borrower shall designate in
the related Advance Request Form, in immediately available funds, the proceeds
of the Advance being made.
Section 2.09 Reduction of the Commitment. In the event that the Borrower
---------------------------
fails to repay the Advances to an amount equal to One Thousand and No/100
Dollars ($1,000.00) on or before May 31, 1996, as provided in Section 2.06, the
Commitment shall be reduced on June 1, 1996, to an amount equal to the aggregate
outstanding principal balance of all Advances hereunder on June 1, 1996, and,
from and after such date through and including the Termination Date, the Lender
shall have no obligation to make Advances hereunder in an aggregate principal
amount in excess of such reduced Commitment.
ARTICLE III
Fees and Payments
-----------------
Section 3.01 Facility Fee. Commencing on the date hereof and continuing
------------
on the first Business Day of each June thereafter through and including the
Termination Date, the Borrower shall pay to the Lender, in advance, a facility
fee equal to three-eighths percent (3/8%) of the total Commitment in effect as
of such date.
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<PAGE>
Section 3.02 Method and Application of Payment. All payments of principal,
---------------------------------
interest, fees and other amounts to be made by the Borrower under this
Agreement, the Note and the other Loan Documents shall be made to the Lender in
immediately available funds, without set-off, deduction or counterclaim, not
later than 1:00 p.m. (Jackson, Mississippi time) on the date on which such
payment shall become due (each such payment made after such time on such due
date to be deemed to have been made on the next succeeding Business Day).
Section 3.03 Application of Payments. Unless and until an Event of Default
-----------------------
shall have occurred and be continuing (in which event such payments shall be
applied by the Lender as the Lender in the Lender's sole discretion shall
determine), all payments received in respect of the Advances shall be applied
first to the payment of all amounts (except principal and interest) at the time
due and unpaid hereunder or under any of the other Loan Documents, then to
interest hereon or thereon accrued to the date of payment, and finally to the
unpaid principal hereunder or thereunder.
Section 3.04 Voluntary Prepayment. The Borrower may prepay, without premium
--------------------
or penalty, all or any portion of the outstanding principal amount of the
Advances upon at least five (5) Business Days' prior written notice by the
Borrower to the Lender stating the proposed date and the principal amount of
such proposed prepayment.
Section 3.05 Mandatory Prepayments. (a) If at any time the outstanding
---------------------
principal balance of the Advances to the Borrower exceeds the Borrowing Base,
the Borrower shall promptly prepay to the Lender the amount of the excess plus
accrued and unpaid interest on the amount so prepaid. (b) If at any time, the
Debt Coverage Ratio calculated for the preceding twelve (12) months is less than
1.5 to 1, the Borrower shall promptly prepay to the Lender a portion of the
outstanding Advances, plus accrued and unpaid interest on the amount so prepaid,
sufficient to achieve a Debt Coverage Ratio not less than 1.5 to 1.
Section 3.06 Payments Without Deduction. The Borrower shall pay principal,
--------------------------
interest and other amounts under, and in accordance with the terms of, the Note,
free and clear of and without deduction for any and all present and future
taxes, levies, imposts, deductions, charges, withholdings, and all liabilities
with respect thereto, excluding income and franchise taxes of the United States
of America or any political subdivision thereof on or measured by the net income
of the Lender.
Section 3.07 Payment of Taxes, Etc. The Borrower agrees to pay any present
---------------------
or future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies of the United States or any State or political
subdivision thereof or any applicable foreign jurisdiction that arise from any
payment made by the Borrower hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any of the
other Loan Documents and to deliver to the Lender evidence of such payment to
the relevant governmental authority.
Section 3.08 Payments on Non-Business Days. If any payment under the Note,
-----------------------------
this Agreement or any of the other Loan Documents becomes due and payable on a
day that is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and such extension of time in each case shall be
included in the computation of interest.
ARTICLE IV
Security
--------
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<PAGE>
Section 4.01 Collateral. To secure full and complete payment and performance
of the Obligations, the Borrower shall execute and deliver, or cause to be
executed and delivered, the documents described below covering the real and
personal property and collateral described in this Section 4.01 (which, together
with any other property and collateral which may now or hereafter secure the
Obligations or any part thereof, as released from time to time from the liens of
the Loan Documents, pursuant to Section 4.03, is sometimes herein called the
"Collateral"):
----------
(a) The Borrower shall grant to the Lender a first priority lien on and
security interest in the LaVista Apartments, the Pin Oaks Apartments and the
Sunchase Apartments, and the leases and rents with respect thereto, pursuant
to the Deeds of Trust, the Deed to Secure Debt and the Assignments of Leases.
(b) The Borrower shall grant to the Lender a first priority lien on and
security interest in all of the Additional Properties owned by the Borrower,
and the leases and rents with respect thereto as provided in Section
5.02(h)(i).
(c) The Borrower shall grant to the Lender a first priority lien on and
security interest in all of the stock of each of the Corporate Property
Subsidiaries pursuant to the Stock Pledge Agreement and as provided in
Section 5.02(i).
(d) The Borrower shall grant to the Lender a first priority lien on and
security interest in the LakePointe Business Park Loan Documents and the
other Assigned Agreements pursuant to the Assignment Agreements and as
provided in Section 5.02(h)(ii).
(e) The Borrower, the General Partners and any other Person having an
interest in a Property Subsidiary which is a partnership shall grant to the
Lender a first priority lien on and security interest in all of the
partnership interests of each such Property Subsidiary which is a partnership
pursuant to the Partnership Assignments and as provided in Section 5.02(i).
(f) The Property Subsidiaries shall grant to the Borrower a first
priority lien on and security interest in the LakePointe Business Park and
the Additional Properties, all of which liens and security interests shall be
collaterally assigned to the Lender pursuant to the Assignment Agreement and
as provided in Section 5.02(h)(ii).
(g) The Borrower shall execute and cause to be executed by the Property
Subsidiaries, or otherwise such further documents and instruments, including,
without limitation, UCC financing statements, as the Lender, in its sole
discretion, deems necessary or desirable to evidence and perfect the Lender's
liens and security interests in the Collateral.
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<PAGE>
Section 4.02 Set-off.
-------
(a) As further security for the Obligations, the Borrower hereby grants
to the Lender as security for the Obligations a security interest in and lien
on all monies, securities, instruments and other property of the Borrower and
each of the Property Subsidiaries, and the proceeds thereof, now or hereafter
held or received by or in transit to the Lender from or for the Borrower or
any of the Property Subsidiaries, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and also upon any and all deposits
(general or special, time or demand, provisional or final) and other accounts
of the Borrower and any of the Property Subsidiaries now or hereafter on
deposit with or held by the Lender and all other sums at any time credited by
or owing from the Lender to the Borrower or any of the Property Subsidiaries.
Upon the occurrence and during the continuation of an Event of Default, the
Lender is hereby authorized at any time and from time to time, without notice
to the Borrower or any of the Property Subsidiaries, to set off, appropriate
and apply any or all items hereinabove referred to against the Obligations
and all other sums due and owing by the Borrower or any of the Property
Subsidiaries to the Lender, whether now existing or hereafter arising, in
such manner as the Lender may determine. The rights and remedies of the
Lender hereunder are in addition to other rights and remedies (including,
without limitation, other rights of set-off) which the Lender may have.
Section 4.03 Partial Release of Collateral. Notwithstanding any thing to the
-----------------------------
contrary contained herein, the Lender shall release one or more of the
Properties from the liens of the applicable Loan Documents upon the occurrence
of all of the following:
(a) The Borrower shall pay to the Lender in cash an amount equal to,
(i) in the event the Property is a Subsidiary Property, the lesser of (x) the
outstanding principal balance of the Assigned Note secured by such Subsidiary
Property or (y) sixty-five percent (65%) of the Eligible Appraised Value of
the Subsidiary Property included in the most recent Borrowing Certificate
furnished to the Lender, or (ii) in the event that the Property is a Borrower
Property, sixty-five percent (65%) of the Eligible Appraised Value of the
Borrower Property included in the most recent Borrowing Base Certificate
furnished to the Lender;
(b) From and after the payment of the release price referred to in
paragraph (a) and the release of the applicable Property and exclusion
thereof from the Borrowing Base, the outstanding principal balance of all
Advances hereunder shall not exceed the lesser of (i) the Commitment or (ii)
the Borrowing Base;
(c) No Default or Event of Default shall have occurred and be
continuing hereunder;
(d) The Borrower shall have prepared and delivered to the Lender all
applicable release documents and such documents shall have been approved by
the Lender, which approval shall not be unreasonably withheld;
(e) The Borrower shall have paid all costs and expenses, including
reasonable attorneys fees, incurred by the Lender in connection with such
release;
(f) The Borrower shall have provided to the Lender ten (10) days
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<PAGE>
prior written notice of the requested date of the release; and
(g) The Borrower shall have executed and delivered to the Lender all
other documents and instruments deemed reasonably necessary by the Lender
in connection with such release, including, without limitation, an updated
Borrowing Base Certificate.
Section 4.04 Release of Collateral. Upon payment in full of all of the
---------------------
indebtedness, and satisfaction of all of the liabilities and obligations, of the
Borrower, each of the Property Subsidiaries and each of the General Partners
under the Note, this Agreement and the other Loan Documents, the Lender shall
execute and deliver to the Borrower all documents and instruments reasonably
necessary to release and discharge the Lender's liens on and security interests
in the Collateral created by the Loan Documents.
ARTICLE V
Conditions Precedent
--------------------
Section 5.01 Initial Advance. The obligation of the Lender to make the
---------------
initial Advance under this Agreement (as amended and restated herein) is subject
to the satisfaction of all of the following conditions on or before the date of
such Advance:
(a) Resolutions. The Lender shall have received resolutions of the
-----------
Board of Trustees of the Borrower certified by the Borrower's Secretary or an
Assistant Secretary which authorize the execution, delivery and performance by
the Borrower of this Agreement and the other Loan Documents to which the
Borrower is or is to be a party.
(b) Incumbency Certificate. The Lender shall have received a
----------------------
certificate of incumbency certified by the Secretary or an Assistant
Secretary of the Borrower certifying the names of the officers of the
Borrower authorized to sign this Agreement and each of the other Loan
Documents to which the Borrower is or is to be a party (including the
certificates contemplated herein) together with specimen signatures of such
officers.
(c) Trust Agreement. The Lender shall have received a copy of the
---------------
trust agreement of the Borrower certified by the Secretary of State of the
state of organization of the Borrower and dated within ten (10) days prior
to the date of the initial Advance.
(d) Governmental Certificates. The Lender shall have received a
-------------------------
certificate of the appropriate government official of the state of
organization of the Borrower as to the existence and good standing of the
Borrower, dated within ten (10) days prior to the date of the initial
Advance, and certificates of the appropriate government officials of the
State of Mississippi as to the qualification of the Borrower to do business
in such states.
(e) Note. The Borrower shall have properly executed and delivered the
----
Note to the Lender.
(f) Deeds of Trust. The Borrower shall have properly executed and
--------------
delivered the Deeds of Trust to the Lender.
(g) Deed to Secure Debt. The Borrower shall have properly executed and
-------------------
delivered the Deed to Secure Debt to the Lender.
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<PAGE>
(h) Assignment of Leases. The Borrower shall have properly executed
--------------------
and delivered the Assignments of Leases to the Lender.
(i) Stock Pledge Agreement. The Borrower shall have properly executed
----------------------
and delivered the Stock Pledge Agreement to the Lender, together with the
original stock certificates referred to therein from time to time and stock
transfer powers executed in blank with respect to such stock certificates.
(j) Assignment Agreement. The Borrower shall have properly executed
--------------------
and delivered the Assignment Agreement to the Lender, together with the
originals of the Assigned Agreements referred to therein from time to time,
endorsed and assigned as required by the Assignment Agreement.
(k) Financing Statements. The Lender shall have received Uniform
--------------------
Commercial Code financing statements properly executed by the Borrower;
Uniform Commercial Code terminations or assignments or subordinations
relating to any Uniform Commercial Code financing statements on file
against the Borrower and covering any of the Collateral; and all
Collateral, the possession of which is necessary to perfect the security
interest of the Lender therein.
(l) Amendments to LakePointe Business Park Loan Documents, Etc. The
-----------------------------------------------------------
Borrower and the LakePointe Business Park Subsidiary shall have properly
executed and delivered to the Lender all amendments to the LakePointe
Business Park Loan Documents reasonably deemed necessary by the Lender and
the Lender shall have received all other documents and instruments in
connection therewith required by the Lender, including, without limitation,
an endorsement to the title insurance policy and applicable corporate
documents.
(m) Title Insurance Commitments. The Lender shall have received from
---------------------------
the Borrower mortgagee title insurance commitments with respect to the real
properties described in the Deeds of Trust, the Deed to Secure Debt and the
LakePointe Business Park Loan Documents, which commitments shall be issued
by a title insurance company acceptable to the Lender and shall bear
coverage amounts and be in form and substance satisfactory to the Lender.
Such mortgagee title insurance commitments shall be sufficient to
establish, to the reasonable satisfaction of the Lender, the Lender's
perfected first priority lien on and security interest in the real property
Collateral and the leases and rents relating to the Existing Properties
subject only to Liens permitted by the Lender. The effective date of the
mortgagee title insurance commitments shall be updated to the date and time
of the initial Advance and such commitments shall be endorsed, marked-up or
issued in the form of a final title insurance policy on the date of the
initial Advance to the satisfaction of the Lender and the Lender shall have
received evidence reasonably satisfactory to the Lender that all premiums
for such final title insurance policies have been paid in full.
(n) UCC Searches. The Lender shall have received the results of
------------
Uniform Commercial Code searches showing all financing statements and other
documentation or instruments on file against the Borrower and any of the
Property Subsidiaries in the jurisdictions listed on Schedule 1, such
----------
searches to be as of a date no more than thirty (30) days prior to the date
of the initial Advance. Such searches shall be sufficient to establish, to
the reasonable satisfaction of the Lender, the Lender's perfected first
priority lien on and security interest in the personal
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<PAGE>
property Collateral relating to the Existing Properties.
(o) Surveys. The Lender shall have received from the Borrower surveys
-------
of the real property Collateral described in the Deeds of Trust, the Deed
to Secure Debt and the LakePointe Business Park Loan Documents indicating
the improvements thereon, which surveys shall have been prepared by
surveyors and be in a form acceptable to the Lender and the title insurance
company issuing the title insurance policies.
(p) Environmental Reports. The Lender shall have received level I
---------------------
environmental assessments relating to the environmental condition of, and
the status of compliance with Environmental Laws with respect to, the
Collateral relating to the Existing Properties, which such assessments
shall be addressed to the Lender, shall be in form and content acceptable
to the Lender, and shall have been prepared by an environmental engineer or
engineers approved by the Lender.
(q) Appraisals. The Lender shall have received appraisals of the
----------
Existing Properties from independent certified appraisers satisfactory to
the Lender, reflecting a loan appraised value not less than $23,850,000.00,
in the aggregate, which appraisals shall be in conformance with any
applicable regulation promulgated pursuant to the Financial Institutions
Reform, Recovery and Enforcement Act of 1989.
(r) Evidence of Zoning, Etc. The Lender shall have received evidence
-----------------------
reasonably satisfactory to the Lender that the Existing Properties are in
compliance with all material laws, rules, regulations and ordinances,
including, without limitation, all material zoning laws and ordinances.
(s) Licenses, Permits, Approvals. The Lender shall have received
----------------------------
evidence that the Existing Properties possess all necessary licenses,
permits and governmental approvals necessary to operate such properties.
(t) Insurance Policies. The Lender shall have received copies of all
------------------
insurance policies relating to the Existing Properties and required by
Section 7.06, together with the mortgagee, loss payee and additional
insured endorsements required by Section 7.06 with respect to such
insurance policies.
(u) Operating Statements. The Lender shall have received copies of the
--------------------
most recent fiscal year end operating statements and the current year-to-
date operating statements for each of the Existing Properties, which such
statements shall set forth separately the property included in, the
liabilities relating to and the results of operation of each such Property
and shall otherwise be in form and content satisfactory to the Lender. Such
financial statements shall be certified as accurate by the chief financial
officer of the Borrower.
(v) Rent Roll. The Lender shall have received a current rent roll for
---------
each of the Existing Properties, together with copies of the forms of
leases used in connection with such Properties, all certified by an officer
of the Borrower to the Lender and in form and content satisfactory to the
Lender.
(w) Inspection. The Lender and the Participants shall have inspected
----------
each of the Existing Properties, and determined that such Properties are
acceptable collateral for the Obligations.
(x) Opinions of Counsel. The Lender shall have received
-------------------
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<PAGE>
favorable opinions of legal counsel to the Borrower, in form and substance
acceptable to the Lender and addressing such matters as the Lender may
reasonably request.
(y) Participation Agreements. The Lender shall have received and
------------------------
approved one or more participation agreements pursuant to which such
Participants agree to advance at least $36,000,000 of the principal of the
Note.
(z) Fees and Expenses. The Borrower shall have paid all reasonable
-----------------
fees, costs and expenses incurred or sustained by the Lender (including all
reasonable attorneys' fees) in connection with the preparation, execution
and delivery of this Agreement, the other Loan Documents and any related
documents.
Section 5.02 Additional Property Advances. The Lender and the Borrower
----------------------------
agree that from time to time the Borrower may desire to pledge to the Lender
additional properties, to include such properties in the Borrowing Base and to
obtain an Advance based on the inclusion of such properties in the Borrowing
Base. The obligation of the Lender to include any such property in the
Borrowing Base and to make an Advance based on the inclusion of such
Properties in the Borrowing Base is subject to the satisfaction of all of the
following conditions:
(a) Additional Property Approval Request. The Lender shall have
------------------------------------
received twenty (20) days prior to the requested Additional Property
Inclusion Date an acquisition approval request (the "Additional Property
-------------------
Approval Request") consisting of the following documents, all in form and
----------------
substance satisfactory to the Lender:
(i) In the event that the Borrower or a Property Subsidiary
intends to acquire the Additional Property, (A) a description of the
acquisition transaction and the other parties involved, and (B) copies
of any and all documents setting forth the terms of the proposed
acquisition, including all purchase documents, letters of intent or
similar documents; and
(ii) Copies of the most recent fiscal year end operating
statements and current year-to-date operating statements for the
Additional Property, to the extent available to the Borrower.
(b) Approval of Additional Property Request. The Lender and the
---------------------------------------
Participants, in their sole and absolute discretion, shall have approved
the Additional Property Approval Request and the proposed use of any
Advance requested by the Borrower. The Lender shall notify the Borrower in
writing within ten (10) days of the receipt of all of the information
specified in Section 5.02(a) above whether the Lender and the Participants
approve such Additional Property and agree that such Additional Property
may be included in the calculation of the Borrowing Base subject to the
satisfaction of the other provisions contained in Section 5.02.
(c) Resolutions. The Lender shall have received resolutions of the
-----------
Board of Directors, Board of Trustees or partners, as applicable, of the
Borrower or the Property Subsidiary owning or acquiring, as applicable, the
Additional Property certified by the Borrower's or such Property
Subsidiary's Secretary or Assistant Secretary, or the General or Managing
Partner, as applicable, which authorizes the execution, delivery and
performance by the Borrower or the Property Subsidiary, as applicable, of
each agreement required to be delivered pursuant to this
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<PAGE>
Section 5.02 and authorizing the Borrower or the Property Subsidiary, as
applicable, to consummate the pledging, financing and/or acquisition
contemplated. If the Property Subsidiary is a partnership, the Lender
shall have received the same information and documents with respect to such
Property Subsidiary's General Partners.
(d) Incumbency Certificate. The Lender shall have received a
----------------------
certificate of incumbency certified by the Secretary or an Assistant
Secretary, or the General or Managing Partner, as applicable, of the
Borrower or the Property Subsidiary, as applicable, certifying the names of
the officers or partners, as applicable, of the Borrower or the Property
Subsidiary, as applicable, authorized to sign each of the documents
required to be delivered pursuant to this Section 5.02 and, if applicable,
the acquisition documents to which the Property Subsidiary is or is to be a
party, together with specimen signatures of such officers or partners, as
applicable. If the Property Subsidiary is a partnership, the Lender shall
have received the same information and documents with respect to such
Property Subsidiary's General Partners.
(e) Articles of Incorporation and Certificate of Limited Partnership.
----------------------------------------------------------------
The Lender shall have received a copy of the Articles of Incorporation or
Certificate of Limited Partnership, as applicable, of the Property
Subsidiary certified by the Secretary of State of the state of organization
of such Property Subsidiary and dated within ten (10) days prior to the
date of the Additional Property Inclusion Date. If the Property Subsidiary
is a partnership, the Lender shall have received the same information and
documents with respect to such Property Subsidiary's General Partners.
(f) Bylaws and Partnership Agreement. The Lender shall have received a
--------------------------------
copy of the Bylaws or Partnership Agreement, as applicable, of the Property
Subsidiary certified by the Secretary or an Assistant Secretary, or the
General or Managing Partner, as applicable, of the Property Subsidiary. If
the Property Subsidiary is a partnership, the Lender shall have received
the same information and documents with respect to such Property
Subsidiary's General Partners.
(g) Governmental Certificates. The Lender shall have received a
-------------------------
certificate of the appropriate government official of the state of
organization of the Property Subsidiary as to the existence and good
standing of the Property Subsidiary, dated within ten (10) days prior to
the Additional Property Inclusion Date, and a certificate of the
appropriate governmental official of each of the states where the Property
Subsidiary is qualified to do business with respect to the good standing
and qualification of such Property Subsidiary to do business in such
states. If the Property Subsidiary is a partnership, the Lender shall have
received the same information and documents with respect to such Property
Subsidiary's General Partners.
(h) Additional Property Loan Documents. The Lender shall have received
----------------------------------
the following documents, each in form and substance satisfactory to the
Lender:
(i) If the Additional Property is owned or will be owned by the
Borrower, the Lender shall receive the following Loan Documents:
(A) The Borrower shall have executed and delivered to the
Lender a deed of trust, mortgage, deed to secure debt or other
security instrument and security agreement and an assignment of leases
and rents necessary to grant to the Lender a first
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<PAGE>
priority perfected lien on and security interest in all of the
Additional Property (real and personal), and the leases and rents
relating thereto, the terms and conditions of which shall be
substantially similar to the Deeds of Trust, the Deed to Secure Debt
and the Assignments of Leases.
(B) The Lender shall have received Uniform Commercial Code
financing statements duly executed by the Borrower in proper form for
filing in such offices as may be necessary or, in the opinion of the
Lender, desirable to perfect the security interest purported to be
created by the deed of trust, mortgage, deed to secure debt and
security agreement to be delivered pursuant to Section 5.02(h)(i)(A).
(ii) If the Additional Property is owned or will be owned by a
Property Subsidiary, the Lender shall receive the following Assigned
Agreements:
(A) The Property Subsidiary shall have properly executed and
delivered an Assigned Note evidencing the loan from the Borrower to
the Property Subsidiary of the proceeds of the requested Advance.
(B) The Property Subsidiary shall have executed and delivered
to the Borrower a deed of trust, mortgage, deed to secure debt or
other security instrument and security agreement and an assignment of
leases and rents necessary to grant to the Borrower a first priority
perfected lien on and security interest in all of the Additional
Property (real and personal), and the leases and rents relating
thereto, the terms and conditions of which shall be substantially
similar to the Deeds of Trust, the Deed to Secure Debt and the
Assignments of Leases.
(C) The Lender shall have received Uniform Commercial Code
financing statements duly executed by the Property Subsidiary in
proper form for filing in such offices as may be necessary or, in the
opinion of the Lender, desirable to perfect the security interest
purported to be created by the deed of trust, mortgage, deed to secure
debt and security agreement to be delivered pursuant to Section
5.02(h)(ii)(B).
(D) The Lender shall have received all documents, instruments
and endorsements which the Lender deems reasonably necessary to
collaterally assign to the Lender the documents required by this
Section 5.02(h)(ii) to the Lender pursuant to the Assignment
Agreement, including, without limitation, an amendment to the
Assignment Agreement.
(i) Stock Certificates and Assignment of Partnership Interests. If the
----------------------------------------------------------
Additional Property is owned or will be owned by a Property Subsidiary and
the Property Subsidiary is a corporation, the Lender shall have received
all of the original stock certificates of the Property Subsidiary issued by
the Property Subsidiary, together with blank stock transfer powers with
respect thereto and an amendment to the Stock Pledge Agreement amending the
Stock Pledge Agreement to encumber such stock certificates, all in form and
content satisfactory to the Lender. If the Property Subsidiary is a
partnership, the Lender shall have received an assignment of the
partnership interests and security agreement executed by all of the
partners of the Property Subsidiary, and granting to the Lender a first
priority lien on and security interest in all of the
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<PAGE>
partnership interests in and to the Property Subsidiary, the terms and
conditions which shall be substantially similar to the Partnership
Assignment, together with all UCC-1 Financing Statements and other
documents and instruments deemed reasonably necessary by the Lender to
perfect the Lender's first priority lien on and security interest in all of
the partnership interests in and to the Property Subsidiary.
(j) Title Insurance. The Lender shall have received a mortgagee title
---------------
insurance commitment with respect to the Additional Property, which
commitment shall be issued by Stewart Title Insurance Company or another
title insurance company acceptable to the Lender and shall bear a coverage
amount and be in form and substance satisfactory to the Lender. Such
mortgagee title insurance commitment shall be sufficient to establish, to
the reasonable satisfaction of the Lender, the Lender's first priority
perfected lien on the Additional Property subject only to Liens permitted
by the Lender. The mortgagee title insurance commitment shall be endorsed,
marked-up or issued in the form of a final title insurance policy on the
date of the Additional Property Inclusion Date to the satisfaction of the
Lender and the Lender shall have received evidence reasonably satisfactory
to the Lender that all premiums for such final title insurance policy have
been paid in full.
(k) UCC Searches. The Lender shall have received the results of
------------
Uniform Commercial Code searches showing no Liens affecting the Additional
Property, or the pledged stock certificates or partnership interests, other
than those granted in favor of the Lender.
(l) Survey. The Lender shall have received a survey of the Additional
------
Property indicating the improvements thereon, which survey shall be
prepared by surveyors and be in form acceptable to the Lender and the title
insurance company issuing the title insurance commitment.
(m) Environmental Report. The Lender shall have received a level I
--------------------
environmental assessment relating to the environmental condition of, and
the status of compliance with Environmental Laws with respect to, the
Additional Property, which such assessment shall be addressed to the
Lender, shall be in form and content acceptable to the Lender, and shall
have been prepared by an environmental engineer or engineers approved by
the Lender.
(n) Appraisal. The Lender shall have received an appraisal from an
---------
independent certified appraiser satisfactory to the Lender, which appraisal
shall be in conformance with any applicable regulation promulgated pursuant
to the Financial Institutions Reform, Recovery and Enforcement Act of 1989,
and dated no more than ninety (90) days prior to the date of the Additional
Property Inclusion Date.
(o) Evidence of Zoning, Etc. The Lender shall have received evidence
-----------------------
reasonably satisfactory to the Lender that the Additional Property is in
compliance with all material laws, rules, regulations and ordinances,
including, without limitation, all material zoning laws and ordinances.
(p) Licenses, Permits, Approvals. The Lender shall have received
----------------------------
evidence that the Additional Property possesses all necessary material
licenses, permits and governmental approvals necessary to operate such
Additional Property.
(q) Insurance Policies. The Lender shall have received copies of all
------------------
insurance policies relating to the Additional Property required by
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<PAGE>
Section 7.06, together with mortgagee, loss payee and additional insured
endorsements in favor of the Lender required by Section 7.06 with respect
to such insurance policies.
(r) Rent Roll. The Lender shall have received a current rent roll for
---------
the Additional Property, together with copies of the forms of lease used in
connection with such property, all certified by an officer of the Borrower
to the Lender and in form and content satisfactory to the Lender.
(s) Inspection. The Lender and the Participants shall have inspected
----------
the Additional Property and determined that such Property is acceptable
collateral for the Obligations.
(t) Opinions of Counsel. The Lender shall have received a favorable
-------------------
opinion of legal counsel to the Property Subsidiary purchasing and/or
pledging the Additional Property, as applicable, and the Borrower, in form
and substance acceptable to the Lender and addressing such matters as the
Lender may reasonably request.
(u) Borrowing Base Report. The Lender shall have received a properly
---------------------
completed and executed Borrowing Base Certificate including the Additional
Property.
(v) Other Documents. The Lender shall have received all other
---------------
documents, instruments, estoppel certificates, waivers, consents or other
approvals from any person or persons, and evidence of the completion of all
other actions, as may, in the opinion of the Lender, be necessary or
desirable to establish the priority of or otherwise protect the liens and
security interest purported to be created by the documents delivered
pursuant to Section 5.02(h), the Stock Pledge Agreement, the Partnership
Assignments, the Assignment Agreement and the other Loan Documents.
(w) Certificate of Borrower's President. The Lender shall have
-----------------------------------
received a certificate of the Borrower's president, dated as of the
Additional Property Inclusion Date, certifying that (i) the warranties
contained in Article VI hereof are true and correct on and as of such date,
except for changes as are permitted by the terms of this Agreement; (ii)
since the date of the most recent financial statement provided to the
Lender pursuant to Section 7.02 hereof, no material adverse change in the
operations or conditions, financial or otherwise, of the Borrower and its
Subsidiaries taken as a whole, has occurred and is continuing; (iii) all
obligations, covenants, agreements and conditions contained in this
Agreement to be performed by the Borrower or the Property Subsidiary on or
prior to such date have been performed or satisfied in all respects; (iv)
no Default or Event of Default has occurred and is continuing; and (v) to
the best of such president's knowledge, the inclusion of the Additional
Property in the Borrowing Base or the making of any such Advance based on
the inclusion of the Additional Property in the Borrowing Base shall not
contravene any law, rule or regulation applicable to the Borrower, the
Additional Property Subsidiary or the Lender, as applicable.
(x) Fees and Expenses. The Borrower shall pay all reasonable fees,
-----------------
costs and expenses incurred or sustained by the Lender (including all
reasonable attorneys' fees) in connection with the preparation, execution
and delivery of the Loan Documents, the Assigned Agreements and other
documents relating to the inclusion of the Additional Property in the
Borrowing Base and the Additional Property.
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<PAGE>
(y) Other Properties. If the proceeds of the requested Advance will
----------------
be used by the Borrower to acquire a property other than the Additional
Property requested to be included in the Borrowing Base, (i) the Borrower
shall have delivered to the Lender, and the Lender shall have approved,
which approval shall not be unreasonably withheld, a description of such
property and copies of the most recent fiscal year end operating statements
and year-to-date operating statements for such property, to the extent
available to the Borrower, (ii) the Borrower shall have delivered to the
Lender a certificate certifying to the Lender that all of the proceeds of
such Advance shall be used by the Borrower solely to acquire such other
property, and (iii) the Borrower shall have delivered to the Lender all
documents, instruments and other information deemed reasonably necessary by
the Lender to determine whether the amount of the requested Advance
complies with Section 2.07(e).
Section 5.03 All Advances. The obligation of the Lender to make any
------------
Advance (including the initial Advance) is subject to the satisfaction of all of
the following additional conditions precedent:
(a) No Default. There shall exist no Default or Event of Default on
----------
the date of such Advance.
(b) Representation and Warranties. The representations and warranties
-----------------------------
of the Borrower, each of the Property Subsidiaries and the other parties
thereto made in the Assigned Agreements and the other Loan Documents shall
be true in all material respects on and as of the date of such Advance.
(c) Covenants and Agreements. The Borrower and each of the Property
------------------------
Subsidiaries shall have performed or observed all agreements, covenants and
conditions required to be performed or observed by the Borrower and the
Property Subsidiaries under the Loan Documents on or prior to the date of
the Advance.
(d) Advance Request Form. The Lender shall have received, in
--------------------
accordance with Section 2.07, an Advance Request Form executed by an
authorized officer of the Borrower requesting such Advance, all of the
statements in which shall be true and correct on and as of the date of such
Advance, before and after giving effect to such Advance.
(e) Borrowing Base. The aggregate amount of all outstanding Advances
--------------
plus the amount of the requested Advance shall not exceed the lesser of (a)
the Borrowing Base or (b) the Commitment.
(f) Debt Coverage Ratio. The Debt Coverage Ratio using an Annual Debt
-------------------
Service amount computed on the aggregate amount of all Advances which would
be outstanding after the requested Advance shall not be less than 1.5 to 1.
(g) Additional Information. The Lender shall have received such
----------------------
consents, certificates of estoppel, other within assurances, subordination
agreements and additional documents, instruments and information as the
Lender or its legal counsel may reasonably request.
ARTICLE VI
Representations and Warranties
------------------------------
To induce the Lender to enter into this Agreement, the Borrower represents
and warrants to the Lender that:
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<PAGE>
Section 6.01 Trust Existence. The Borrower (a) is a Maryland real estate
---------------
investment trust and is duly organized, validly existing and in good standing
under the laws of the State of Maryland; (b) has all requisite trust power and
authority to own its assets and carry on its business as now being or as
proposed to be conducted; and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a Material Adverse Effect.
The Borrower has the trust power and authority to execute, deliver and perform
its obligations under this Agreement and the other Loan Documents to which it is
or may become a party.
Section 6.02 Corporate and Partnership Status. Each of the Property
--------------------------------
Subsidiaries and each of the General Partners (a) is duly organized, validly
existing and in good standing under the laws of the state of its organization as
a corporation or limited partnership; (b) has all requisite corporate or
partnership, as applicable, power, and authority to own its assets and to carry
on its business as now being or as proposed to be conducted; and (c) is
qualified to do business in all jurisdictions in which the nature of its
business make such qualification necessary and where failure to so qualify would
have a Material Adverse Effect. Each of the Subsidiaries of the Borrower (not
including the Property Subsidiaries) (a) is duly organized, validly existing and
in good standing under the laws of the state of its organization as a
corporation or limited partnership; (b) has all requisite corporate or
partnership, as applicable, power and authority to own its assets and to carry
on its business as now being or as proposed to be conducted; and (c) is
qualified to do business in all jurisdictions in which the nature of its
business make such qualification necessary, except where the failure of any of
the foregoing does not and could not have a Material Adverse Effect. Each of the
Property Subsidiaries and each of the General Partners has the corporate or
partnership, as applicable, power and authority to execute, deliver and perform
its obligations under this Agreement, the Assigned Agreements and the other Loan
Documents to which it is or may become a party.
Section 6.03 Trust Action; No Breach. The execution, delivery and
-----------------------
performance by the Borrower of this Agreement and the other Loan Documents to
which the Borrower is or may become a party have been duly authorized by all
requisite action on the part of the Borrower and do not and will not violate or
conflict with the trust agreement of the Borrower or the articles of
incorporation or bylaws, or certificate of limited partnership or partnership
agreement, as applicable, of its Subsidiaries or any law, rule or regulation or
any order, writ, injunction or decree of any court, governmental authority or
arbitrator (except where such violation or conflict does not and could not have
a Material Adverse Effect), and do not and will not conflict with, result in a
breach of or constitute a default under, or result in the creation or imposition
of any Lien (except as provided in Article IV) upon any of the revenues or
assets of the Borrower or its Subsidiaries pursuant to the provisions of any
indenture, mortgage, deed of trust, security agreement, franchise, permit,
license or other instrument or agreement by which the Borrower or its
Subsidiaries or any of their respective properties are bound.
Section 6.04 Corporate and Partnership Action; No Breach. The execution,
-------------------------------------------
delivery and performance by each of the Property Subsidiaries and the General
Partners of the Assigned Agreements and the other Loan Documents to which such
Property Subsidiary or the General Partners, as applicable, is or may become a
party have been duly authorized by all requisite action on the part of the
Property Subsidiary and such General Partner and do not and will not violate or
conflict with the articles of incorporation or bylaws, or certificate of limited
partnership or partnership agreement, as applicable, of such Property Subsidiary
or General Partner or any law, rule or regulation or any order,
-25-
<PAGE>
writ, injunction or decree of any court, governmental authority or arbitrator
(except where such violation or conflict does not and could not have a Material
Adverse Effect), and do not and will not conflict with, result in a breach of or
constitute a default under, or result in the creation or imposition of any Lien
(except as provided in Article IV) upon any of the revenues or assets of any of
the Property Subsidiaries or the General Partners pursuant to the provisions of
any indenture, mortgage, deed of trust, security agreement, franchise, permit,
license or other instrument or agreement by which such Property Subsidiary or
the General Partners, or any of their respective properties are bound.
Section 6.05 Enforceability. This Agreement constitutes, and the Assigned
--------------
Agreements and the other Loan Documents to which the Borrower, any of the
Property Subsidiaries or any General Partner is party, when delivered, shall
constitute the legal, valid and binding obligations of the Borrower, such
Property Subsidiary and such General Partner, enforceable against the Borrower,
such Property Subsidiary and such General Partner in accordance with their
respective terms, except as limited by bankruptcy, insolvency or other laws of
general application relating to the enforcement of creditors' rights and general
principles of equity.
Section 6.06 Financial Statements. The Borrower has delivered to the
--------------------
Lender audited consolidated financial statements of the Borrower and its
Subsidiaries as of and for the fiscal year ended December 31, 1993, and
unaudited consolidated financial statements of the Borrower and its Subsidiaries
for the three (3) month period ended March 31, 1994. Such financial statements
are true and correct, have been prepared in accordance with GAAP and fairly and
accurately present, on a consolidated basis, the financial condition of the
Borrower and its Subsidiaries as of the respective dates indicated therein and
the results of operation for the respective periods indicated therein. Neither
the Borrower nor any Subsidiary has any material contingent liabilities,
liabilities for taxes, material forward or long-term commitments or unrealized
or anticipated losses from any unfavorable commitments not reflected in such
financial statements. There has been no material adverse change in the
condition, financial or otherwise, or operations of the Borrower and its
Subsidiaries, on a consolidated basis, since the effective date of the most
recent financial statements referred to in this Section.
Section 6.07 Operating Statements. The Borrower has delivered to the
--------------------
Lender operating statements for the Existing Properties as of and for the fiscal
year ended December 31, 1993, and operating statements for each of the Existing
Properties for the five (5) month period ended May 31, 1994. Such operating
statements are true and correct in all material respects, and fairly and
accurately present, the liabilities relating to and results of operations of
each such Property for the respective periods indicated therein.
Section 6.08 Rent Roll. The Borrower has delivered to the Lender a rent
---------
roll with respect to each of the Sunchase Apartments and the LaVista Apartments,
dated May 25, 1994, and for each of the LakePointe Business Park and the Pin
Oaks Apartments, dated May 31, 1994. Each such rent roll truly and correctly
states with respect to each such Property the name of each tenant, licensee,
concessionaire or other occupant thereof, the rent and other charge paid by such
tenant, licensee, concessionaire or other occupant, the date to which such rent
and other charges are paid, the date on which the interest of such tenant,
licensee, concessionaire or other occupant in such Property terminates and the
amount held by the Borrower or the LakePointe Business Park Subsidiary, as
applicable, by way of security deposit from each such tenant, licensee,
concessionaire or other occupant, together with the form of lease used for each
such Property.
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<PAGE>
Section 6.09 Operation of Business. The Borrower and its Subsidiaries
---------------------
possess all licenses, permits, franchises, patents, copyrights, trademarks and
trade names, or rights thereto, to conduct their respective businesses
substantially as now conducted and as presently proposed to be conducted, and
the Borrower and its Subsidiaries are not in violation of any valid rights of
others with respect to any of the foregoing, except where the failure to possess
any such license, etc. or the violation of any such rights does not and could
not have a Material Adverse Effect.
Section 6.10 Litigation and Judgments. Except as disclosed on Schedule 2
------------------------ ----------
hereto, there is no action, suit, investigation, or proceeding before or by any
court, governmental authority or arbitrator pending, or to the knowledge of the
Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries, that would, if adversely determined, have a Material Adverse
Effect. There are no outstanding judgments against the Borrower or any of its
Subsidiaries.
Section 6.11 Rights in Properties; Liens. The Borrower and its
---------------------------
Subsidiaries have good and indefeasible title to or valid leasehold interests in
their respective properties and assets, real and personal, including the
properties, assets and leasehold interests reflected in the financial statements
described in Section 6.06, and none of the Properties are subject to any Lien,
except as permitted by Section 8.02, and none of the other properties, assets or
leasehold interests of the Borrower or any of its Subsidiaries is subject to any
Lien, except as permitted by Section 8.02 and except for Liens that do not and
could have a Material Adverse Effect.
Section 6.12 Approvals. No authorization, approval or consent of, and no
---------
filing or registration with, any court, governmental authority or third party is
or will be necessary for the execution, delivery or performance by the Borrower,
any Property Subsidiary or any General Partner of this Agreement, the Assigned
Agreements and the other Loan Documents to which the Borrower, any Property
Subsidiary or any General Partner is or may become a party or for the validity
or enforceability thereof.
Section 6.13 Debt. The Borrower and its Subsidiaries have no Debt, except
----
as disclosed in the financial statements described in Section 6.06 or as
disclosed on Schedule 3 hereto.
----------
Section 6.14 Taxes. The Borrower and its Subsidiaries have filed all tax
-----
returns (Federal, state and local) required to be filed, including all income,
franchise, employment, property and sales taxes, and have paid all of their
respective liabilities for taxes, assessments, governmental charges and other
levies that are due and payable (other than those the amount or validity of
which are currently being diligently contested in good faith by appropriate
proceedings and in respect of which adequate reserves in conformity with GAAP
have been provided on the books of the Borrower or such Subsidiary, as
applicable) except where the failure to file such tax returns does not and could
not have a Material Adverse Effect, and the Borrower does not know of any
pending investigation of the Borrower or any of its Subsidiaries by any taxing
authority or of any pending but unassessed tax liability of the Borrower or any
of its Subsidiaries, except where such liability does not and could not have a
Material Adverse Effect.
Section 6.15 Use of Proceeds; Margin Securities. The Borrower and its
----------------------------------
Subsidiaries are not engaged principally, or as one of their important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations G, T, U or X of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
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<PAGE>
of any extension of credit under this Agreement will be used to purchase or
carry any such margin stock or to extend credit to others for the purpose of
purchasing or carrying margin stock. The Borrower nor any Person acting on its
behalf has taken any action that might cause the transactions contemplated by
this Agreement or the Note to violate Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System or to violate the Securities Exchange
Act of 1934, as amended.
Section 6.16 Investment Company. Neither the Borrower nor any of its
------------------
Subsidiaries is an "investment company" or an "affiliated person" of, or
"promotee" or "principal underwriter" for, an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended. The
issuance of the Note by the Borrower, the application of the proceeds and the
repayment thereof by the Borrower and the performance of the transactions
contemplated by this Agreement and the other Loan Documents by the Borrower and
its Subsidiaries will not violate any provisions of said Act, or any rule,
regulation or order issued by the Securities and Exchange Commission thereunder.
Section 6.17 ERISA. The Borrower and its respective Subsidiaries have
-----
complied with all applicable minimum funding requirements and all other
applicable and material requirements of ERISA, and there are no existing
conditions that would give rise to liability thereunder, except where such
liability does not and could not have a Material Adverse Effect. No Reportable
Event has occurred in connection with any Plan that might constitute grounds for
the termination thereof by the PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer such Plan.
Section 6.18 Disclosure. No statement, information, report, representation
----------
or warranty made by the Borrower or any Property Subsidiary or any General
Partner in this Agreement, in any of the Assigned Agreements or in any other
Loan Document or furnished to the Lender in connection with the negotiation or
preparation of this Agreement or any of the Assigned Agreements contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading. There is no
fact known to the Borrower which has a Material Adverse Effect, or which
reasonably might in the future have a Material Adverse Effect, that has not been
disclosed in writing to the Lender.
Section 6.19 Other Agreements. Neither the Borrower nor any of its
----------------
Subsidiaries are a party to any indenture, loan or credit agreement, or to any
lease or other agreement or instrument, or subject to any charter or corporate
restriction which could have a Material Adverse Effect, except as disclosed in
the financial statements described in Section 6.06. Neither the Borrower nor any
of its Subsidiaries are in default in any respect in the performance, observance
or fulfillment of any of the obligations, covenants or conditions contained in
any agreement or instrument material to its respective business to which it is a
party, except where such default does not and could not have a Material Adverse
Effect.
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<PAGE>
Section 6.20 Compliance with Law. The Borrower and its Subsidiaries are in
-------------------
compliance with all laws, rules, regulations, orders and decrees which are
applicable to the Borrower or its Subsidiaries or any of their respective
properties, except where the failure to comply does not and could not have a
Material Adverse Effect.
Section 6.21 Compliance With Environmental Laws.
----------------------------------
(a) The Borrower, each of its Subsidiaries and all of their respective
properties, assets and operations are in compliance with all Environmental
Laws, except where failure to comply does not and could not have a Material
Adverse Effect. The Borrower is not aware of, nor has the Borrower or any
of its Subsidiaries received notice of, any past, present or future
conditions, events, activities, practices or incidents which may interfere
with or prevent the compliance or continued compliance of the Borrower and
its Subsidiaries with all Environmental Laws, except where failure to
comply does not and could not have a Material Adverse Effect.
(b) The Borrower and all of its Subsidiaries have obtained all
permits, licenses and authorizations which are required under Environmental
Laws, except where failure to obtain such permits, etc. does not and could
not have a Material Adverse Effect.
(c) No Hazardous Substances exist on, about or within or have been
used, generated, stored, transported, disposed of on or released from any
of the properties or assets of the Borrower or its Subsidiaries, except in
compliance with Environmental Laws, except where failure to comply with the
Environmental Laws does not and could not have a Material Adverse Effect.
The use which the Borrower and its Subsidiaries make and intend to make of
their respective properties and assets will not result in the use,
generation, storage, transportation, accumulation, disposal or release of
any Hazardous Substance on, in or from any such properties or assets.
(d) There is no action, suit, proceeding, investigation or inquiry
before any court, administrative agency or other governmental authority
pending or, to the knowledge of the Borrower, threatened against the
Borrower or any of its Subsidiaries relating in any way to any
Environmental Law that, if adversely determined, could have a Material
Adverse Effect. Neither the Borrower nor any of its Subsidiaries has (i)
been notified of any liability for remedial action under any Environmental
Law, (ii) received any request for information by any governmental
authority with respect to the condition, use or operation of any of its
properties or assets, or (iii) received any notice from any governmental
authority or other Person with respect to any violation of or liability
under any Environmental Law.
Section 6.22 Use of Proceeds and Benefit to the Borrower. The proceeds of
-------------------------------------------
the Advances shall be utilized by the Borrower to finance the acquisition of
other properties, such as garden apartments, bulk distribution warehouse
buildings and office buildings, by the Borrower and its wholly-owned
Subsidiaries, and for no other purpose. Each loan of the proceeds of an Advance
by the Borrower to a Property Subsidiary shall be evidenced and secured by the
documents described in Section 5.02(h)(ii).
Section 6.23 Names. The exact trust name of the Borrower as it appears in
-----
the Borrower's trust agreement is as set forth in the first paragraph of this
Agreement. The exact corporate or partnership name, as applicable, of each
Property Subsidiary and each General Partner as it appears in such Property
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<PAGE>
Subsidiary's or such General Partner's articles of incorporation or partnership
agreement, as applicable, is as set forth in the Assigned Agreements and the
Partnership Assignments, as applicable. None of the Property Subsidiaries, the
General Partners or the Borrower with respect to the Properties has done
business in any location, or taken title to any of its properties or assets,
under any other name, except that the Borrower has done business in the name
"Pin Oaks Apartments". The Borrower's principal place of business in Georgia is
located in DeKalb County, Georgia.
Section 6.24 Collateral. The Deeds of Trust, the Deed to Secure Debt, the
----------
Assignments of Leases, the Stock Pledge Agreement, the Partnership Assignments,
the Assignment Agreement and the Assigned Agreements create in favor of the
Lender valid and enforceable liens on and security interests in the properties
described therein which secure the payment and performance of the Obligations,
including, without limitation, all future Advances pursuant to this Agreement
and the Note and all extensions, renewals and other modifications thereof. Upon
the filing of UCC financing statements in the jurisdictions set forth in
Schedule 4 attached hereto naming the Borrower as debtor and the Lender as
- ----------
secured party covering the personal property Collateral owned by the Borrower
and the filing of UCC terminations, assignments or subordinations relating to
the UCC financing statements listed on Schedule 4, the liens created by the
----------
Deeds of Trust, the Deed to Secure Debt, the Assignments of Leases, the
Partnership Assignment, the Assignment Agreement and the Assigned Agreements
shall constitute first priority perfected liens on and security interests in the
personal property described therein which shall be superior and prior to the
rights of all third Persons now existing or hereafter arising except for Liens
permitted by Sections 8.02(a) through (f). Upon the recording of the Deeds of
Trust, the Deed to Secure Debt, the Assignments of Leases and the applicable
Assignment Agreements in the office of the recorder of deeds of the counties
where the real property is located, there shall be a first priority perfected
lien on the real property described therein which shall be superior and prior to
the rights of all third Persons now existing or hereafter arising except for the
Liens permitted by Sections 8.02(a) through (f). Upon the delivery to the Lender
of all of the stock certificates referred to in the Stock Pledge Agreement,
together with the stock transfer powers referred to therein, there shall be a
first priority lien on the pledged securities referred to therein which shall be
superior and prior to the rights of all third Persons now existing or hereafter
arising.
Section 6.25 Trademarks, Patents, Etc. To the best of the Borrower's
------------------------
knowledge, the Borrower and its Subsidiaries possess all trademarks and service
marks (or have licenses for the use thereof), trade names, copyrights, patents,
licenses, permits, approvals and consents (including, without limitation,
licenses, approvals and consents of all governmental authorities) and rights in
any thereof, adequate for the conduct of their respective businesses as now
conducted, or as currently proposed to be conducted, without conflict with the
rights or claimed rights of others.
Section 6.26 Solvency. The Borrower and each of its Subsidiaries is
--------
Solvent, and will not, as a result of the transactions contemplated hereby, by
the Assigned Agreements or by the other Loan Documents (a) become not Solvent,
or (b) have liabilities (including contingencies) in excess of the fair saleable
value of its assets.
Section 6.27 Public Offering. Based upon all pertinent information
---------------
available to the Borrower and to the best of the Borrower's knowledge, the
planned equity offering of the Borrower in an amount not less than Seventy
Million and No/100 Dollars ($70,000,000.00) described to the Lender by the
Borrower is expected to be successfully completed within a reasonable period of
time.
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<PAGE>
Section 6.28 Public Company. The Borrower and each of its Subsidiaries is in
--------------
compliance with all of the provisions of the Securities and Exchange Acts of
1933 and 1934, as amended from time to time, except where failure to comply does
not and could not have a Material Adverse Effect.
Section 6.29 Event of Default. No event has occurred and is continuing that
----------------
constitutes a Default or an Event of Default or would constitute such a Default
or Event of Default after the giving of notice or the lapse of time, or both.
ARTICLE VII
Positive Covenants
------------------
The Borrower covenants and agrees that, as long as the Obligations or any part
thereof are outstanding or the Lender has any Commitment hereunder, the Borrower
will perform and observe, or cause to be performed or observed the following
positive covenants:
Section 7.01 Payment. The Borrower shall duly and punctually pay or cause to
-------
be paid all sums due hereunder.
Section 7.02 Reporting Requirements. The Borrower will furnish to the Lender
----------------------
all of the following:
(a) Annual Financial Statements. As soon as available, and in any event
---------------------------
within ninety (90) days after the end of each fiscal year of the Borrower,
beginning with the fiscal year ending December 31, 1994, a copy of the annual
audit report of the Borrower and its Subsidiaries for such fiscal year
containing, on a consolidated and consolidating basis, balance sheets,
statements of income, statements of retained earnings and statements of cash
flows as at the end of such fiscal year and for the 12-month period then
ended, in each case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and audited and certified by
independent certified public accountants of recognized standing acceptable to
the Lender, to the effect that such report has been prepared in accordance
with GAAP.
(b) Quarterly Financial Statements. As soon as available, and in any event
------------------------------
within forty-five (45) days after the end of each calendar quarter, a copy of
an unaudited financial report of the Borrower and its Subsidiaries as of the
end of such month and for the portion of the fiscal year then ended,
containing, on a consolidated basis, balance sheets, statements of income,
statements of retained earnings and statements of cash flows, in each case
setting forth in comparative form the figures for the corresponding period of
the preceding fiscal year, all in reasonable detail certified by the chief
financial officer of the Borrower to have been prepared in accordance with
GAAP and to fairly and accurately present (subject to year-end audit
adjustments) the financial condition and results of operations of the Borrower
and its Subsidiaries, on a consolidated basis, at the date and for the periods
indicated therein.
(c) Operating Statements. As soon as available, and in any event within
--------------------
forty-five (45) days after the end of each calendar quarter, operating
statements for such calendar quarter for each of the Properties, which such
operating statements shall correctly and accurately reflect the operations of
each of the Properties, shall set forth separately the property included in,
the liabilities relating to
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<PAGE>
and the results of operations of, such Property, and shall be certified as
accurate by the chief financial officer of the Borrower or the respective
Property Subsidiary, as applicable.
(d) Rent Roll. As soon as available, and in any event within forty-five
---------
(45) days after the end of each calendar quarter, a rent roll dated as of the
end of such quarter and stating with respect to each of the Properties the
name of each tenant, licensee, concessionaire or other occupant thereof, the
rent and other charges paid by such tenant, licensee, concessionaire or other
occupant, the date to which such rent and other charges are paid, the date on
which the interest of such tenant, licensee, concessionaire or other occupant
in such Property terminates and the amount held by the Borrower or the
Property Subsidiary, as applicable, by way of security deposit for each such
tenant, licensee, concessionaire or other occupant, which such rent rolls
shall be certified as accurate by the chief financial officer of the Borrower
or the respective Property Subsidiary, as applicable.
(e) Borrowing Base Report. As soon as available, and in any event within
---------------------
ten (10) days after the end of each calendar quarter and within three (3) days
after any material change to the Borrowing Base, a completed and updated
Borrowing Base Report.
(f) Management Letters. Promptly upon receipt thereof, a copy of any
------------------
management letter or written report submitted to the Borrower or any of its
Subsidiaries by independent certified public accountants with respect to the
financial condition, operations, business or prospects of the Borrower or its
Subsidiaries.
(g) Notice of Litigation. Promptly after the commencement thereof, notice
--------------------
of all actions, suits and proceedings before any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, affecting the Borrower or any of its Subsidiaries which, if
determined adversely to the Borrower or its Subsidiaries, could have a
Material Adverse Effect.
(h) Notice of Default. As soon as possible and in any event within five
-----------------
(5) days after the Borrower knows or has reason to know of the occurrence of
each Default or Event of Default, written notice setting forth the details of
such Default or Event of Default and the action which the Borrower has taken
and proposes to take with respect thereto.
(i) ERISA Reports. Promptly after the filing or receipt thereof, copies of
-------------
all reports, including annual reports, and notices which the Borrower or any
of its Subsidiaries files with or receives from the PBGC or the United States
Department of Labor under ERISA; and as soon as possible and in any event
within five (5) days after the Borrower or any of its Subsidiaries knows or
has reason to know that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or that the PBGC or the Borrower or any of
its Subsidiaries has instituted or will institute proceedings under Title IV
of ERISA to terminate any Plan, a certificate of the chief financial officer
of the Borrower setting forth the details as to such Reportable Event or
Prohibited Transaction or Plan termination and the action that the Borrower
proposes to take with respect thereto.
(j) REIT Reports. Promptly after the filing or receipt thereof, copies of
------------
all material reports, including, without limitation, Quarterly 10-Qs and
Annual 10-Ks of the Borrower, and material notices which the
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Borrower or any of its Subsidiaries files with or receives from the Securities
and Exchange Commission.
(k) Notice of Environmental Law Violation. As soon as possible and in any
-------------------------------------
event within five (5) days after the Borrower knows or has reason to know of
the occurrence thereof, written notice of (i) any violation of any
Environmental Law that the Borrower or any of its Subsidiaries reports or is
required to report to any governmental authority and the action which the
Borrower or such Subsidiary has taken or proposes to take with respect thereto
and/or (ii) any citation for the violation of any Environmental Law received
by the Borrower or any of its Subsidiaries.
(l) Notice of Material Adverse Effect. As soon as possible and in any
---------------------------------
event within ten (10) days after the Borrower knows or has reason to know of
the occurrence thereof, written notice of any matter that could have a
Material Adverse Effect.
(m) General Information. Promptly, such other information concerning the
-------------------
Collateral, the Borrower or any of its Subsidiaries as the Lender may from
time to time reasonably request.
Section 7.03 Maintenance of Existence; Conduct of Business. The Borrower will
---------------------------------------------
preserve and maintain, and will cause each of the Property Subsidiaries and the
General Partners to preserve and maintain, and will cause each of its
Subsidiaries (other than the Property Subsidiaries) to preserve and maintain
(except there the failure to preserve and maintain will not have a Material
Adverse Effect), its trust, corporate or partnership existence, as applicable,
and all of its leases, privileges, licenses, permits, franchises, qualifications
and rights that are necessary or desirable in the ordinary conduct of its
business, and conduct, and cause each of its Subsidiaries to conduct, its
business as presently conducted in an orderly and efficient manner in accordance
with good business practices, except where failure to do so does not and could
not have a Material Adverse Effect.
Section 7.04 Maintenance of Properties. The Borrower will maintain, keep and
-------------------------
preserve, and cause each of its Subsidiaries to maintain, keep, and preserve,
all of their properties (tangible and intangible) necessary or useful in the
proper conduct of their business in good working order and condition, except
where failure to do so will not have a Material Adverse Effect.
Section 7.05 Taxes and Claims. The Borrower will pay or discharge, and will
----------------
cause each of its Subsidiaries to pay or discharge, at or before maturity or
before becoming delinquent (a) all taxes, levies, assessments and governmental
charges imposed on it or its income or profits or any of its property, and (b)
all lawful claims for labor, material and supplies, which, if unpaid, might
become a Lien upon any of its property, except where failure to do so will not
have a Material Adverse Effect; provided, however, that the Borrower and its
Subsidiaries shall not be required to pay or discharge any tax, levy, assessment
or governmental charge which is being contested in good faith by appropriate
proceedings diligently pursued and for which adequate reserves have been
established on the books of the Borrower or such Subsidiary in accordance with
GAAP.
Section 7.06 Insurance. The Borrower will maintain, and will cause each of
---------
its Subsidiaries to maintain, with financially sound and reputable insurance
companies workmen's compensation insurance, liability insurance and insurance on
its property, assets and business at least in such amounts and against such
risks as are usually insured against by Persons engaged in similar businesses,
except where the failure to maintain such insurance does not and could not have
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a Material Adverse Effect. In addition to such insurance and more specifically,
the Borrower will maintain, and will cause each of the Property Subsidiaries to
maintain, with respect to the Properties owned by the Borrower or such Property
Subsidiary, as applicable, the insurance coverage required by the Deeds of
Trust, the Deed to Secure Debt and the Assigned Agreements.
Section 7.07 Inspection Rights. At any reasonable time and from time to time
-----------------
and upon reasonable notice, the Borrower will permit, and will cause each of its
Subsidiaries to permit, representatives of the Lender and the Participants to
examine and make copies of the books and records of, and visit and inspect the
properties of the Borrower and any of its Subsidiaries, and to discuss the
business, operations and financial condition of the Borrower and its
Subsidiaries with their officers and employees and with their independent
certified public accountants; provided, however, that such representative uses
-------- -------
reasonable efforts not to unduly interfere with or delay the reasonable
operation of normal business.
Section 7.08 Keeping Books and Records; Fiscal Year. The Borrower will
-------------------------
maintain, and will cause each of the Property Subsidiaries to maintain, and will
use its best efforts to cause each of its Subsidiaries (other than the Property
Subsidiaries) to maintain proper books of record and account in which full, true
and correct entries in conformity with GAAP shall be made of all dealings and
transactions in relation to its business and activities. The Borrower will
maintain, and will cause each of its Subsidiaries to maintain, their fiscal year
as a calendar year.
Section 7.09 Compliance with Laws. The Borrower will comply, and will cause
--------------------
each of its Subsidiaries to comply, with all applicable laws, rules, regulations
and orders of any court, governmental authority or arbitrator, including,
without limitation, all Environmental Laws, except where the failure to comply
does not and could not have a Material Adverse Effect.
Section 7.10 Compliance with Agreements. The Borrower will comply, and will
--------------------------
cause each of its Subsidiaries to comply, in all material respects with all
indentures, mortgages, deeds of trust and other agreements binding on it or
affecting its properties or business, except where the failure to comply does
not and could not have a Material Adverse Effect.
Section 7.11 Further Assurances. The Borrower will execute and deliver, and
------------------
will cause each of its Subsidiaries to execute and deliver, such further
documentation as may be reasonably requested by the Lender to carry out the
provisions and purposes of this Agreement, the Assigned Agreements and the other
Loan Documents and to preserve and perfect the Liens of the Lender in the
Collateral.
Section 7.12 ERISA. The Borrower will comply, and will cause each of its
-----
Subsidiaries to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder which has or could have a Material Adverse Effect.
Section 7.13 Regulations G, T, U and X. Neither the Borrower nor any Person
-------------------------
acting on its behalf will take any action which might cause this Agreement or
any of the Loan Documents to violate, and the Borrower will take all actions
necessary to cause compliance with, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System and the Securities Exchange Act of 1934,
in each case as now in effect or as the same may hereafter be in effect.
Section 7.14 Compliance With Loan Documents. The Borrower will and will cause
------------------------------
each of the Property Subsidiaries and each of the General Partners to
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(a) make full and timely payments of the principal of and interest on the Note,
the Assigned Agreements and all other amounts owed by the Borrower and any of
its Subsidiaries and any of the General Partners to the Lender, whether now
existing or hereafter arising, and (b) duly comply with all the terms and
provisions contained in this Agreement, the Assigned Agreements and each of the
other Loan Documents to which the Borrower and any of the Property Subsidiaries
and each of the General Partners is a party, all at the times and places and in
the manner set forth therein.
Section 7.15 Discharge of Liens. The Borrower will take and will cause each
------------------
of the Property Subsidiaries and each of the General Partners to take promptly,
at its own cost and expense, such action as may be necessary duly to discharge
any Lien not permitted by Section 8.02.
Section 7.16 Special Environmental Matters. The Borrower will manage and take
-----------------------------
care of, and will cause each of the Property Subsidiaries and each of the
General Partners to manage and take care of, all the asbestos containing
materials located on the Properties in accordance with the practices outlined in
Environmental Protection Agency Publication 560/5-85-018 (1985), Asbestos in
-----------
Buildings, Guidance for Service and Maintenance Personnel (the "Publication").
- --------------------------------------------------------- -----------
The Borrower shall provide to the Lender annually, commencing on the first
anniversary date of this Agreement, a certificate executed by the President of
the Borrower certifying that, to the best of his knowledge, the Borrower, each
of the Property Subsidiaries and each of the General Partners have maintained
the materials containing asbestos located on the Properties in accordance with
the Publication. The Borrower hereby discloses to the Lender that there are
materials containing non-friable asbestos located in the LaVista Apartments, as
more specifically identified in that certain "Preliminary Site Assessment of
LaVista Crossing Apartment Complex, DeKalb County, Tucker, Georgia", dated
October 8, 1993, PSI Project Number: 241-34032, prepared for the Borrower by
Professional Service Industries, Inc., C-Tech Division.
Section 7.17 Appraisals. The Borrower shall furnish, and shall cause each of
----------
the Property Subsidiaries to furnish, to the Lender, as soon as available, and
in any event within forty-five (45) days after the Lender's request therefor
(provided, however, that in no event shall the Borrower be required to furnish
-------- -------
or to cause any Property Subsidiary to furnish such an updated appraisal with
respect to a certain Property more than once during any calendar year), an
updated appraisal of all of the Properties pledged to the Lender as Collateral,
which such appraisals shall be (a) addressed to the Lender, (b) in conformance
with all applicable regulations promulgated pursuant to the Financial
Institutions Reform, Recovery and Enforcement Act of 1989, (c) in form and
content acceptable to the Lender and (d) dated no more than thirty (30) days
prior to the Lender's receipt thereof.
Section 7.18 Tangible Net Worth. The Borrower shall at all times maintain a
------------------
Tangible Net Worth in an amount not less than Seventy-Five Million and No/100
Dollars ($75,000,000.00).
Section 7.19 Debt to Net Worth Ratio. The Borrower shall not permit the Debt
-----------------------
to Net Worth Ratio to be greater than 1.25 to 1 during any fiscal quarter of the
Borrower.
Section 7.20 Debt Coverage Ratio. The Borrower shall not permit the Debt
-------------------
Coverage Ratio to be less than 1.5 to 1 at the end of any fiscal quarter of the
Borrower.
Section 7.21 Prepayments Under the Assigned Agreements. The Borrower shall
-----------------------------------------
promptly remit to the Lender in the form received all prepayments of principal
and/or interest received by the Borrower under the Assigned
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<PAGE>
Agreements and shall provide to the Lender within three (3) days after any such
prepayment a completed and updated Borrowing Base Report.
ARTICLE VIII
Negative Covenants
------------------
The Borrower covenants and agrees that, as long as the Obligations or any part
thereof are outstanding or the Lender has any Commitment hereunder, the Borrower
will perform and observe, or cause to be performed or observed the following
negative covenants:
Section 8.01 Debt. The Borrower will not incur, create, assume or permit to
----
exist, nor will the Borrower permit any of the Property Subsidiaries or any of
the General Partners to incur, create, assume or permit to exist, any Debt,
except:
(a) The Obligations;
(b) Existing Debt described on Schedule 3 attached hereto or in the
----------
financial statements described in Section 6.06;
(c) Other Debt of the types described in clauses (c), (d) and (h) of
the definition thereof;
(d) Other Debt for which the holder or creditor thereof has recourse
against the Borrower, any of the Property Subsidiaries and/or any of the
General Partners not exceeding One Million and No/100 Dollars ($1,000,000.00)
in the aggregate outstanding at any time;
(e) Other Debt having a maturity date of seven (7) years or longer
and for which the holder or creditor thereof does not have recourse against
the Borrower, any of the Property Subsidiaries or any of the General Partners;
and
(f) In the event that the Borrower must borrow money in order to
make the principal and interest payment to the Lender required by the last
sentence of Section 2.04, other Debt, so long as all of the proceeds of such
Debt are applied solely to make such principal and interest payment, and for
no other purpose.
Section 8.02 Limitation on Liens. The Borrower will not incur, create, assume
-------------------
or permit to exist, nor will the Borrower permit any of the Property
Subsidiaries or any of the General Partners to incur, create, assume or permit
to exist, any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, except:
(a) Existing Liens disclosed on Schedule 5 hereto or disclosed in
----------
the financial statements described in Section 6.06;
(b) Permitted Exceptions (as defined in the Deeds of Trust, the Deed
to Secure Debt and the mortgages and deeds of trust granted pursuant to
Section 5.02(h);
(c) Liens in favor of the Lender;
(d) Liens for taxes, assessments or other governmental charges which
are not delinquent or which are being diligently contested in good faith and
for which adequate reserves have been established in accordance with GAAP;
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<PAGE>
(e) Liens of mechanics, materialmen, warehousemen, carriers or other
similar statutory Liens securing obligations that are not yet due and are
incurred in the ordinary course of business;
(f) Liens resulting from good faith deposits to secure payments of
workmen's compensation or other social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids
or contracts (other than for payment of Debt) in the ordinary course of
business; and
(g) Liens created to secure Debt permitted by Section 8.01 provided
such Liens do not encumber any of the Collateral or impair or affect the Liens
in the Collateral or the priority thereof required or represented by this
Agreement.
Section 8.03 Mergers, Acquisitions and Dissolutions. The Borrower will not,
--------------------------------------
nor will the Borrower permit any of the General Partners or any of the Property
Subsidiaries to, become a party to a merger or consolidation, or purchase or
otherwise acquire all or a substantial part of the assets of any Person (except
in the ordinary course of the Borrower's business) or any shares or other
evidence of beneficial ownership of any Person (except as permitted by Section
8.04), or dissolve or liquidate.
Section 8.04 Loans and Investments. The Borrower will not make, nor will the
---------------------
Borrower permit any of the General Partners or any of the Property Subsidiaries
to make, any advance, loan, extension of credit, or capital contribution to or
investment in, or purchase or own, or permit any General Partner or any Property
Subsidiary to purchase or own, any stock, bonds, notes, debentures or other
securities of any Person, except:
(a) Investments in Subsidiaries of the Borrower, which Subsidiaries
are owned one hundred percent (100%), directly or indirectly, by the Borrower;
(b) Loans by the Borrower to the Property Subsidiaries which are
evidenced and secured by the Assigned Agreements;
(c) Loans and investments described on Schedule 6 hereto without any
increase in the principal amount thereof or further investment therein after
the date hereof;
(d) Readily marketable direct obligations of the United States of
America;
(e) Fully insured certificates of deposit, with maturities of one
year or less from the date of acquisition of any commercial bank operating in
the United States having capital and surplus in excess of One Hundred Million
and No/100 Dollars ($100,000,000.00);
(f) Commercial paper of a domestic issuer if at the time of purchase
such paper is rated in one of the two highest rating categories of Standard
and Poor's Corporation or Moody's Investors Service; and
(g) Other loans and investments not exceeding One Million and No/100
Dollars ($1,000,000.00) in the aggregate at any time outstanding.
Section 8.05 Disposition of Assets. Except in the ordinary course of business
---------------------
and for fair market consideration, the Borrower will not sell, lease, assign,
transfer or otherwise dispose of any of its assets, nor will the
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<PAGE>
Borrower permit any of the General Partners or any of the Property Subsidiaries
to do so with any of the General Partners' or such Property Subsidiary's assets.
Section 8.06 Nature of Business. The Borrower will not, nor will the Borrower
------------------
permit any of the General Partners or any of the Property Subsidiaries to,
engage in any business other than the businesses in which they are engaged as of
the date hereof or propose to engage in by acquiring the Additional Properties.
Section 8.07 Compliance with Environmental Laws. The Borrower will not, nor
----------------------------------
will the Borrower permit any of its Subsidiaries to, (a) use (or permit any
tenant to use) any of their respective properties or assets for the handling,
processing, storage, transportation or disposal of any Hazardous Substance,
except in compliance with Environmental Laws, (b) generate any Hazardous
Substance, except in compliance with Environmental Laws, (c) conduct any
activity which is likely to cause a release or threatened release of any
Hazardous Substance, except in compliance with Environmental Laws, or (d)
otherwise conduct any activity or use any of their respective properties or
assets in any manner that is likely to violate any Environmental Law.
Section 8.08 Amendments of Agreements and Organizational Documents. The
-----------------------------------------------------
Borrower will not, nor will the Borrower permit any of the General Partners or
any of the Property Subsidiaries to, amend, supplement or otherwise modify in
any material respect, the charter, by-laws or other organizational documents of
the Borrower, any of the General Partners or any of the Property Subsidiaries.
Section 8.09 Transactions with Affiliates. The Borrower will not, nor will
----------------------------
the Borrower permit any of the General Partners or any of the Property
Subsidiaries to, enter into, cause, suffer or permit to exist, any transactions,
including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service, with any Affiliate of the Borrower or
any of the General Partners or any of the Property Subsidiaries on terms that
are less favorable to the Borrower, any of the General Partners or such Property
Subsidiary, as the case may be, other than those that would be obtainable at the
time from any Person that is not such an Affiliate of the Borrower, any of the
General Partners or such Property Subsidiary.
ARTICLE IX
Default
-------
Section 9.01 Events of Default. Each of the following shall be deemed an
-----------------
"Event of Default":
----------------
(a) The failure of the Borrower to pay:
(i) Any installment of principal and/or interest when due
under the Note, unless such failure to pay interest is cured within
ten (10) days;
(ii) The entire outstanding principal of the Note, together
with interest thereon, when due, whether at original maturity, upon
acceleration or otherwise; or
(iii) Any other amount payable under any of the other Loan
Documents to which the Borrower is a party or any supplement,
modification or extension thereof, unless such failure is cured within
ten (10) days after written notice from the Lender to the Borrower.
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<PAGE>
(b) Any direct or indirect, voluntary or involuntary, mortgage,
pledge, hypothecation, encumbrance, sale, lease, assignment or other transfer
of the Collateral or any portion thereof or interest therein made or suffered
by any of the General Partners, any of the Property Subsidiaries or the
Borrower, unless made with the prior written consent of the Lender or
expressly permitted by the terms of this Agreement or any of the other Loan
Documents.
(c) Any representation, warranty or statement made by the Borrower,
any of the General Partners, any Property Subsidiary or any Obligated Party
(or any of their respective officers) in any Loan Document or in any
certificate, report, notice or financial statement furnished at any time in
connection with this Agreement or any of the Assigned Agreements shall be
breached or shall prove to be untrue in any material respect on the date as of
which the same was made, which breach or untruth remains uncured for thirty
(30) days after written notice thereof from the Lender to the Borrower.
(d) There occurs a Change of Control.
(e) There occurs an event of default or a default which continues
beyond the applicable grace or notice period, if any, under any of the
Assigned Agreements or any of the other Loan Documents.
(f) The Borrower or any Obligated Party shall fail to perform,
observe or comply with any covenant, agreement or term contained in Section
7.03, 7.05, 7.06, 7.18, 7.19, 7.20, 7.21 or 7.22 or Article VIII of this
Agreement;
(g) The Borrower, any General Partner, any Property Subsidiary or any
Obligated Party shall default in the due performance or observance of any
term, covenant or agreement on the Borrower's, any General Partner's, such
Property Subsidiary's or such Obligated Party's part to be performed or
observed pursuant to any of the provisions of this Agreement, the Note, any of
the Assigned Agreements or any of the other Loan Documents (other than those
referred in Sections 9.01(a) through (f) hereof) and such default shall
continue for a period of thirty (30) days after written notice thereof from
the Lender to the Borrower, any General Partner, such Property Subsidiary or
such Obligated Party, as applicable; provided, however, that if the curing of
-------- -------
such default cannot be accomplished within said period of time, and if the
Borrower, such General Partner, such Property Subsidiary or such Obligated
Party commences to cure such default promptly after receipt of notice thereof
from the Lender, and thereafter prosecutes the curing of such default with
reasonable diligence, such period of time shall be extended to a period of
time (not to exceed an additional sixty (60) days in the aggregate) necessary
to cure such default with reasonable diligence.
(h) The Borrower, any General Partner, any Property Subsidiary or
any Obligated Party shall suspend or discontinue its or his business, or shall
make an assignment for the benefit of creditors or a composition with
creditors, shall be unable or admit in writing its or his inability to pay its
or his debts as they mature, shall file a petition in bankruptcy, shall become
insolvent (howsoever such insolvency may be evidenced), shall be adjudicated
insolvent or bankrupt, shall petition or apply to any tribunal for the
appointment of any receiver, liquidator or trustee of or for it or him or any
substantial part of its or his property or assets, shall commence any
proceedings under any bankruptcy, reorganization, arrangement, readjustment of
debt, receivership,
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<PAGE>
dissolution or liquidation law or statute of any jurisdiction, whether now or
hereafter in effect; or there shall be commenced against the Borrower, any
General Partner, any Property Subsidiary or any Obligated Party any such
proceeding which shall remain undismissed for a period of sixty (60) days or
more, or any order, judgment or decree approving the petition in any such
proceeding shall be entered; or the Borrower, any General Partner, any
Property Subsidiary or any Obligated Party shall by any act or failure to act
indicate its or his consent to, approval of or acquiescence in, any such
proceeding or in the appointment of any receiver, liquidator or trustee of or
for it or him or any substantial part of its or his property or assets, or
shall suffer any such appointment to continue undischarged or unstayed for a
period of sixty (60) days or more; or the Borrower, any General Partner, any
Property Subsidiary or any Obligated Party shall take any action for the
purpose of effecting any of the foregoing.
(i) The Borrower, any of the Property Subsidiaries, any General
Partner, or any Obligated Party shall fail to discharge within a period of
thirty (30) days after the commencement thereof any attachment, sequestration
or similar proceeding or proceedings involving an aggregate amount in excess
of One Hundred Thousand and No/100 Dollars ($100,000.00) against any of its
assets or properties.
(j) A final judgment or judgments for the payment of money in excess
of One Hundred Thousand and No/100 Dollars ($100,000.00) in the aggregate
shall be rendered by a court or courts against the Borrower, any of the
Property Subsidiaries, any General Partner, or any Obligated Party and the
same shall not be discharged (or provision shall not be made for such
discharge) or a stay of execution thereof shall not be procured within thirty
(30) days from the date of entry thereof and the Borrower, the relevant
Property Subsidiaries, the relevant General Partner or Obligated Party, as
applicable, shall not, within said period of thirty (30) days, or such longer
period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal.
(k) The Borrower, any of its Subsidiaries or any Obligated Party
shall fail to pay when due (and all applicable grace and notice periods with
respect thereto shall have expired) any principal of or interest on any Debt
(other than the Obligations), or the maturity of any such Debt shall have been
accelerated, or any such Debt shall have been required to be prepaid prior to
the stated maturity thereof, or any event shall have occurred that permits
(or, with the giving of notice of lapse of time, or both, would permit) any
holder or holders of such Debt or any Person acting on behalf of such holder
or holders to accelerate the maturity thereof or require any such prepayment,
and any such failure to pay, acceleration or prepayment could have a Material
Adverse Effect.
(l) This Agreement or any other Loan Document shall cease to be in
full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by the Borrower, any
of its Subsidiaries, any Obligated Party or any of their respective
shareholders, or any Lien or security interest created by the Loan Documents
shall for any reason cease to be a valid, first priority perfected security
interest in and Lien upon any of the Collateral purported to be covered
thereby.
(m) Any of the following events shall occur or exist with respect to
the Borrower or any ERISA Affiliate: (i) any Prohibited Transaction involving
any Plan; (ii) any Reportable Event with respect to any Plan;
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<PAGE>
(iii) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Plan, or the institution by the
PBGC of any such proceedings; or (v) complete or partial withdrawal under
Section 4201 or 4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency or termination of any Multiemployer Plan; and in each case above,
such event or condition, together with all other events or conditions, if any,
have subjected or could in the reasonable opinion of the Lender subject the
Borrower to any tax, penalty or other liability to a Plan, a Multiemployer
Plan, the PBGC or otherwise (or any combination thereof) which could have a
Material Adverse Effect.
(n) The Borrower, any of its Subsidiaries or any Obligated Party, or
any of their properties, revenues or assets, shall become the subject of an
order of forfeiture, seizure or divestiture (whether under RICO or otherwise)
and the same shall not have been discharged within thirty (30) days from the
date of entry thereof [and such forfeiture, seizure or divestiture could have
a Material Adverse Effect.
Section 9.02 Remedies Upon Default. Upon the occurrence of an Event of
---------------------
Default, the Lender may without notice terminate the Commitment to lend
hereunder and declare the Obligations or any part thereof to be immediately due
and payable, and the same shall thereupon become immediately due and payable,
without notice, demand, presentment, notice of dishonor, notice of acceleration,
notice of intent to accelerate, notice of intent to demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower; provided, however, that upon the occurrence of an Event of Default
under Section 10.01(h), the Commitment of the Lender to lend hereunder shall
automatically terminate, and the Obligations shall become immediately due and
payable without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to demand,
protest or other formalities of any kind, all of which are hereby expressly
waived by the Borrower.
Section 9.03 Suits for Enforcement. In case any one or more Events of Default
---------------------
shall occur and be continuing, the Lender may proceed to protect and enforce its
rights or remedies either by suit in equity or by action at law, or both,
whether for the specific performance of any covenant, agreement or other
provision contained herein, in the other Loan Documents or in any document or
instrument delivered in connection with or pursuant to this Agreement or the
other Loan Documents or to enforce the payment of the Note or any other legal or
equitable right or remedy.
Section 9.04 Rights and Remedies Cumulative. No right or remedy herein
------------------------------
conferred upon the Lender is intended to be exclusive of any other right or
remedy contained herein or in the other Loan Documents or in any instrument or
document delivered in connection with or pursuant to this Agreement or the other
Loan Documents, and every such right or remedy shall be cumulative and shall be
in addition to every other such right or remedy contained herein and therein or
now or hereafter existing at law or in equity or by statute, or otherwise.
Section 9.05 Rights and Remedies Not Waived. No course of dealing between the
------------------------------
Borrower and the Lender or any failure or delay on the part of the Lender in
exercising any rights or remedies hereunder or otherwise shall operate as a
waiver of any rights or remedies of the Lender and no single or partial exercise
of any rights or remedies hereunder or otherwise shall operate as a
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<PAGE>
waiver or preclude the exercise of any other rights or remedies hereunder or
otherwise.
Section 9.06 Expenditures. Any sums reasonably spent by the Lender pursuant
------------
to the exercise of any right provided herein shall become part of the
Obligations and shall bear interest at the Default Rate from the date spent
until the date repaid by the Borrower.
Section 9.07 Performance by the Lender. Should any covenant, duty or
-------------------------
agreement of the Borrower fail to be performed in all material respects in
accordance with the terms of the Loan Documents, the Lender may, at the Lender's
option, perform, or attempt to perform, such covenant, duty or agreement on
behalf of the Borrower. In such event, the Borrower shall, at the request of the
Lender, promptly pay any reasonable amount expended by the Lender in such
performance or attempted performance to the Lender together with interest
thereon at the Default Rate from the date of such expenditure by the Lender
until paid. Notwithstanding the foregoing, it is expressly understood that the
Lender does not assume, nor shall the Lender have, except by express written
consent of the Lender, any obligation to perform any duties of the Borrower
hereunder.
Section 9.08 The Lender Not in Control. None of the covenants or other
-------------------------
provisions contained in this Agreement shall, or shall be deemed to, give the
Lender the rights or power to exercise control over the affairs and/or
management of the Borrower, the power of the Lender being limited to the rights
to exercise the remedies provided for herein; provided, however, that if the
Lender becomes the owner of any voting stock, or other equity interest in, any
Person whether through foreclosure or otherwise, the Lender shall be entitled to
exercise such legal rights as it may have by being an owner of such voting
stock, or other equity interest in, such Person.
ARTICLE X
Miscellaneous
-------------
Section 10.01 Expenses of the Lender. The Borrower hereby agrees to pay the
----------------------
Lender on demand: (a) all reasonable costs and expenses incurred by the Lender
in connection with the preparation, negotiation and execution of this Agreement
and the other Loan Documents and any and all amendments, modifications,
renewals, extensions and supplements thereof and thereto, including, without
limitation, the reasonable fees and expenses of the Lender's legal counsel, (b)
all reasonable costs and expenses incurred by the Lender in connection with the
enforcement of this Agreement or any other Loan Document, including, without
limitation, the reasonable fees and expenses of the Lender's legal counsel, and
(c) all other reasonable costs and expenses incurred by the Lender in connection
with this Agreement or any other Loan Document, including, without limitation,
all costs, expenses, taxes, assessments, filing fees and other charges levied by
a governmental authority or otherwise payable in respect of this Agreement or
any other Loan Document or in obtaining any mortgagee title insurance commitment
or policy, survey, environmental assessment, collateral audit or appraisal in
respect of the Collateral.
Section 10.02 Indemnification. The Borrower hereby indemnifies the Lender,
---------------
each of the Participants and each Affiliate thereof and their respective
officers, directors, employees, attorneys and agents from, and holds each of
them harmless against, any and all losses, liabilities, claims, damages,
penalties, judgments, costs and expenses (including attorneys' fees) to which
any of them may become subject which directly or indirectly arise from or relate
to (a) the negotiation, execution, delivery, performance,
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<PAGE>
administration or enforcement of any of the Loan Documents, (b) any of the
transactions contemplated by the Loan Documents, (c) any breach by the Borrower
of any representation, warranty, covenant or other agreement contained in any of
the Loan Documents, (d) the presence, release, threatened release, disposal,
removal or cleanup of any Hazardous Substance located on, about, within or
affecting any of the properties or assets of the Borrower or any of its
Subsidiaries, or (e) any investigation, litigation or other proceeding,
including, without limitation, any threatened investigation, litigation or other
proceeding relating to any of the foregoing; provided, however, that no Person
-------- -------
to be indemnified under this Section shall be indemnified from or held harmless
against any losses, liabilities, claims, damages, penalties, judgments, costs
and expenses (including attorneys' fees) arising out of or resulting from the
gross negligence or willful misconduct of the Person to be indemnified. Without
limiting any provision of this Agreement or of any other Loan Document, it is
the express intention of the parties hereto that no Person to be indemnified
under this Section shall be indemnified from and held harmless against any and
all losses, liabilities, claims, damages, penalties, judgments, costs and
expenses (including attorneys' fees) arising out of or resulting from the sole
or contributory negligence of the Person to be indemnified. The obligations of
the Borrower under this Section shall survive the repayment of the Obligations
and the termination of this Agreement. THE INDEMNIFICATION OBLIGATIONS SET
FORTH IN THIS SECTION, IN THE OTHER PROVISIONS OF THIS AGREEMENT AND IN ALL OF
THE OTHER LOAN DOCUMENTS SHALL REMAIN IN FULL FORCE AND EFFECT AND SHALL NOT BE
IMPAIRED OR NULLIFIED BY THE FACT THAT THE CLAIMS TO WHICH SAID INDEMNIFICATION
OBLIGATIONS RELATE ARE CAUSED, EITHER TOTALLY OR IN PART, BY THE ACTIONS OR
OMISSIONS, NEGLIGENT OR OTHERWISE, OF THE PERSON OR ENTITY ENTITLED TO THE
INDEMNIFICATION DESCRIBED HEREIN.
Section 10.03 Modification and Waiver. No modification, amendment or waiver
-----------------------
of any provision of this Agreement, the other Loan Documents or any other
documents executed in connection herewith or therewith and no consent by the
Lender to any departure therefrom by the Borrower shall be effective unless such
modification, amendment, waiver or consent shall be in writing and signed by the
Lender and, other than in the case of a modification or amendment of any
agreement to which the Borrower is not a party, by an authorized officer of the
Borrower, and the same shall then be effective only for the period and on the
conditions and for the specific instances and purposes specified in such
writing. No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
Section 10.04 No Duty. All attorneys, accountants, appraisers and other
-------
professional Persons and consultants retained by the Lender shall have the right
to act exclusively in the interest of the Lender and shall have no duty of
disclosure, duty of loyalty, duty of care or other duty or obligation of any
type or nature whatsoever to the Borrower or any of the Borrower's holders of
beneficial interests or any other Person.
Section 10.05 The Lender Not Fiduciary. The relationship among the Borrower
------------------------
and the Lender is solely that of debtor and creditor, and the Lender has no
fiduciary or other special relationship with the Borrower, and no term or
condition of any of the Loan Documents shall be construed so as to deem the
relationship among the Borrower and the Lender to be other than that of debtor
and creditor.
Section 10.06 Equitable Relief. The Borrower recognizes that in the event the
----------------
Borrower fails to pay, perform, observe or discharge any or all of the
Obligations, any remedy at law may prove to be inadequate relief to the Lender.
The Borrower therefore agrees that the Lender, if the Lender so requests, shall
be entitled to temporary and permanent injunctive relief in any
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<PAGE>
such case in accordance with applicable law.
Section 10.07 Successors and Assigns. This Agreement is binding upon and
----------------------
shall inure to the benefit of the Lender and the Borrower and their successors
and assigns, except that the Borrower may not assign or transfer any of the
Borrower's rights or obligations under this Agreement without the prior written
consent of the Lender.
Section 10.08 Survival and Restatement of Representations and Warranties. All
----------------------------------------------------------
representations and warranties made in this Agreement or any other Loan Document
or in any document, statement or certificate furnished in connection with this
Agreement shall survive the execution and delivery of this Agreement and the
other Loan Documents, and no investigation by the Lender or any closing shall
affect the representations and warranties or the right of the Lender and the
Participants to rely upon them. The delivery of each statement, report and
certificate to the Lender pursuant to this Agreement and each request by the
Borrower for an Advance hereunder (whether by an Advance Request Form or
otherwise) shall by virtue of such delivery or request alone constitute a
restatement of the representations and warranties contained in Article VI hereof
on and as of the date of delivery or the date requested for the Advance, except
that the representations and warranties contained in Sections 6.06, 6.07 and
6.08 shall in each instance be deemed to be made with respect to the financial
statements, operating statements and rent tolls then most recently furnished to
the Lender pursuant to Sections 6.06, 6.07 and 6.07 or 7.02, as the case may be.
Each such delivery or request shall also constitute a representation and
warranty at the time of said delivery or on the date requested for the Advance
that no Default or Event of Default has occurred and is continuing.
Section 10.09 Entire Agreement. This Agreement, the Note and the other Loan
----------------
Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations and understandings, whether written or oral, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous or subsequent oral agreements or discussions of the
parties hereto. There are no oral agreements among the parties thereto.
Section 10.10 Notices. All notices, requests, demands, consents or other
-------
communications given hereunder or in connection herewith shall be in writing,
shall be sent by registered or certified mail, return receipt requested, postage
prepaid, or by hand delivery or expedited delivery service, delivery charges
prepaid and with acknowledged receipt of delivery, shall be deemed given on the
date of acceptance or refusal of acceptance shown on such receipt, and shall be
addressed to the party to receive such notice at the following applicable
address:
If to the Borrower, to:
EastGroup Properties
ATTN: Mr. David H. Hoster II
188 East Capitol Street
3rd Floor, One Jackson Place
Jackson, Mississippi 39201
With a copy by ordinary first class mail to:
Forman, Perry, Watkins & Krutz
ATTN: Steven M. Hendrix, Esq.
188 East Capitol Street
12th Floor, One Jackson Place
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<PAGE>
Jackson, Mississippi 39201
If to the Lender, to:
Deposit Guaranty National Bank
ATTN: Kenneth E. Farmer, Vice President
Real Estate Department
188 East Capitol Street
2nd Floor, One Jackson Place
Jackson, Mississippi 39201
With a copy by ordinary first class mail to:
Butler, Snow, O'Mara, Stevens & Cannada
ATTN: Don B. Cannada, Esq.
17th Floor, Deposit Guaranty Plaza
Post Office Box 22567
Jackson, Mississippi 39225-2567
Any party may, by notice given as aforesaid, change its address for all
subsequent notices. Each notice by or on behalf of any party herein named shall
be deemed sufficient if signed by any one of such party's officers or by such
party's counsel and if otherwise given or made in compliance with this Section.
Section 10.11 Applicable Laws; Venue; Service of Process; Submission to
---------------------------------------------------------
Jurisdiction. This Agreement and each of the other Loan Documents shall be
- ------------
interpreted, construed, applied and enforced in accordance with the laws of the
State of Mississippi, regardless of (a) where any such instrument is executed or
delivered, (b) where any payment or other performance required by such
instrument is made or required to be made, (c) where any breach of any provision
of any such instrument occurs or any cause of action otherwise accrues, (d)
where any action or other proceeding is instituted or pending, (e) the
nationality, citizenship, domicile, principal place of business, jurisdiction of
organization or domestication of any party, (f) whether the laws of the forum
jurisdiction otherwise would apply the laws of a jurisdiction other than the
State of Mississippi, or (g) any combination of the foregoing. Notwithstanding
the foregoing, the laws of the jurisdiction where any of the Collateral is
situated or otherwise has a situs will apply to the perfection, disposition and
realization upon the Collateral. The parties hereto hereby irrevocably consent
(i) to the jurisdiction of the Courts of the State of Mississippi, County of
Hinds, and of any Federal Court located in the Southern District of Mississippi,
and agree that venue in each of such Courts is proper in connection with any
action or proceeding arising out of or relating to this Agreement, the other
Loan Documents or any document or instrument delivered pursuant to this
Agreement or the other Loan Documents, and (ii) to the service of process by
certified mail, return receipt requested. Nothing herein shall affect the right
of any party to serve process in any other manner permitted by law or to
commence legal proceedings or otherwise proceed against any party in any other
jurisdiction.
Section 10.12 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 10.13 Severability. Any provision of this Agreement held by a court
------------
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
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<PAGE>
Section 10.14 Headings. The headings, captions and arrangements used in this
--------
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
Section 10.15 Capital Adequacy. If after the date hereof, the Lender or any
----------------
Participant shall have determined that the adoption of any applicable law, rule
or regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Lender with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Lender or such
Participant with any request or directive regarding capital adequacy (whether or
not having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on the
Lender's or such Participant's capital as a consequence of its obligations
hereunder or the transactions contemplated hereby to a level below that which
the Lender or such Participant could have achieved but for such adoption, change
or compliance (taking into consideration the Lender's or such Participant's
policies with respect to capital adequacy) by an amount deemed by the Lender or
such Participant to be material, then from time to time, within ten (10)
Business Days after demand by the Lender or such Participant, the Borrower shall
pay to the Lender or such Participant such additional amount or amounts as will
compensate the Lender or such Participant for such reduction. A certificate of
the Lender or any Participant claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to the Lender or such
Participant hereunder shall be conclusive, provided that the determination
thereof is made on a reasonable basis. In determining such amount or amounts,
the Lender and each Participant may use any reasonable averaging and attribution
methods.
Section 10.16 Construction. The Borrower and the Lender acknowledge that each
------------
of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by the Borrower and the Lender.
Section 10.17 Confidentiality. The Lender and each Participant is hereby
---------------
authorized to deliver a copy of any financial statement or any other information
relating to the business, operations or financial condition of the Borrower or
any of its Subsidiaries that may be furnished to it hereunder or otherwise to
any attorney or auditor thereof, to any regulatory body or agency having
jurisdiction over the Lender or Participant or to any Person which shall, or
shall have any right or obligation to, succeed to all or any part of the
interest of the Lender in, this Agreement, the other Loan Documents and any
security herein or therein provided for or otherwise securing the Note. Except
as provided above, the Lender agrees that from the date hereof, the Lender will
not, without the prior written consent of the Borrower, submit or disclose to or
file with any Person other than a Participant, any confidential or non-public
information relating to the Borrower, except where disclosure may be required by
law.
Section 10.18 Loss, Theft, Etc. of Note. Upon receipt by the Borrower of (a)
-------------------------
an affidavit of an authorized officer of the Lender setting forth the fact of
loss, theft or destruction of the Note and of its ownership of the Note at the
time of such loss, theft or destruction or (b) a mutilated Note, such affidavit
or mutilated Note shall be accepted as satisfactory evidence thereof and no
further evidence shall be required as a condition to
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<PAGE>
the execution and deliver of a new Note of like tenor in lieu of such lost,
stolen, destroyed or mutilated Note without expense to the Lender; provided,
--------
however, that the Lender agrees in writing to indemnify the Borrower on terms
- -------
reasonably acceptable to the Borrower.
Section 10.19 Usury Limitation. All agreements between the parties hereto
----------------
contained herein are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of maturity of the Note, or
otherwise, shall the amount paid or agreed to be paid to the Lender for the use,
forbearance or detention of the principal amount evidenced by the Note and
secured by the Loan Documents exceed the maximum permissible under applicable
law the benefit of which may be asserted by the Borrower as a defense, and if,
from any circumstance whatsoever fulfillment of any provision of this Agreement,
the Note or any of the other Loan Documents, at the time performance of such
provisions shall be due, shall involve transcending the limit of validity
prescribed by law, or if from any circumstances the Lender should ever receive
as interest under this Agreement, the Note or any of the other Loan Documents
such as excessive amount, then, ipso facto, the amount which would be excessive
----------
shall be applied to the reduction of the principal balance as evidenced by the
Note and secured by the other Loan Documents and not to the payment of interest.
This provision shall control every other provision of all agreements between the
Borrower and the Lender.
Section 10.20 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, THE BORROWER AND THE LENDER HEREBY IRREVOCABLY AND EXPRESSLY
WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE LENDER IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
Section 10.21 Liability of Trustees, Etc. No trustee, beneficiary or officer
--------------------------
of the Borrower shall have personal liability, directly or indirectly, under
this Agreement, the Note or any other Loan Document, or under any certification,
representation or other instrument delivered in connection herewith, and the
Lender shall have recourse hereunder only against the Borrower (excluding its
trustees, beneficiaries and officers), against the Collateral, against such
additional security as may be furnished by or on behalf of the Borrower in
connection herewith and against any and all other assets of the Borrower.
Section 10.22 Prior Loan Agreement. This Agreement amends, modifies, restates
--------------------
and replaces in its entirety the Prior Loan Agreement, and is not intended to
be, and is not, a novation thereof.
ARTICLE XI
Participations; Sales And Transfers
-----------------------------------
Section 11.01 Participants.
------------
(a) The Lender may grant participations to other persons and financial
institutions of the Lender's choosing in all or any portion of its rights
and/or obligations hereunder, under the Lender's Commitment and the Advances.
The Lender shall not be relieved of any of its obligations hereunder as a
result of the granting of any participation. The Borrower hereby acknowledges
and agrees that the Participant may rely on any opinions, certificates or
other instruments delivered under or in connection with this Agreement or the
other Loan Documents.
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<PAGE>
(b) The Lender may furnish to Participants (including, without limitation,
prospective Participants and Assignees) any information concerning the
Borrower or any of its Subsidiaries received by the Lender from time to time
pursuant to this Agreement; provided, however, that each Participant to whom
-------- -------
any such information is delivered shall agree not to use or to disclose to any
other Person such information except as provided in Section 10.17.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
- BORROWER -
--------
EASTGROUP PROPERTIES
By:
---------------------------------
David H. Hoster II,
Its President
By:
---------------------------------
N. Keith McKey,
Its Chief Financial Officer
- LENDER -
------
DEPOSIT GUARANTY NATIONAL BANK
By:
---------------------------------
Kenneth E. Farmer,
Its Vice President
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<PAGE>
EXHIBIT (b)(3)
FIRST AMENDMENT TO FIRST AMENDED AND
RESTATED LOAN AGREEMENT
------------------------------------
THIS FIRST AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AGREEMENT (this
"Agreement") is made and entered into as of the 31st day of October, 1994, by
---------
and between EASTGROUP PROPERTIES, a Maryland real estate investment trust (the
"Borrower"), and DEPOSIT GUARANTY NATIONAL BANK, a national banking association
--------
(the "Lender").
------
WHEREAS, pursuant to that certain First Amended and Restated Loan
Agreement, dated as of June 29, 1994 (as amended, modified and supplemented from
time to time, the "Loan Agreement"), between the Borrower and the Lender, the
--------------
Lender agreed to loan to the Borrower an amount up to Forty-Five Million and
No/100 Dollars ($45,000.000) (as amended, extended and increased from time to
time, the "Loan"); and
----
WHEREAS, the Borrower has requested, and the Lender has agreed, that the
Borrower be permitted (a) to receive an advance under the Loan in the amount of
$4,750,000.00, (b) to loan $3,562,500.00 of said amount to EastGroup Tampa,
Inc., a wholly-owned subsidiary of the Borrower (the "Tampa Subsidiary"), and
----------------
$1,187,500.00 of said amount to Westport Partners, Ltd., a Florida limited
partnership having Ensign Airport Properties, Inc., a Florida corporation, as
its only general ("Westport"), as reimbursement for and payment of reasonable
--------
costs and expenses actually incurred in connection with the acquisition by the
Tampa Subsidiary of a seventy-five percent (75%) interest and by Westport of a
twenty-five percent (25%) interest as tenants in common in the property and
improvements known as the Westport Commerce Center located in Hillsborough
County, Florida (the "Westport Commerce Center"), and (c) to include the
------------------------
Westport Commerce Center in the calculation of the Borrowing Base under the Loan
Agreement; and
WHEREAS, the Borrower and the Lender desire to evidence their agreement in
writing and to make all necessary amendments to the Loan Agreement in connection
with the foregoing;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby
agree as follows:
1. All capitalized terms used and not otherwise defined herein (including,
without limitation, in the language amendatory to the Loan Agreement contained
herein) shall have the respective meanings given such terms in the Loan
Agreement.
<PAGE>
2. The Loan Agreement is hereby amended by deleting in its entirety the
definition "Borrowing Base" included in Section 1.01 of the Loan Agreement and
by substituting in place and instead thereof the following:
"Borrowing Base" means, at any particular time, an amount equal
--------------
to the sum of the following: (a) sixty-five percent (65%) of the
aggregate Eligible Appraised Value of the Borrower Properties, plus,
----
(b) with respect to each of the Subsidiary Properties, the lesser of
(i) sixty-five percent (65%) of the Eligible Appraised Value of the
applicable Subsidiary Property or (ii) the aggregate outstanding
principal balance of the Assigned Note or Assigned Notes, as
applicable, secured by the applicable Subsidiary Property.
3. The Loan Agreement is hereby further amended by adding the following
to the Loan Agreement as Section 7.02(n) of the Loan Agreement:
(n) Certificate of No Default. Concurrently with the delivery of
-------------------------
the annual financial statements referred to in Section 7.02(a) and the
quarterly financial statements referred to in Section 7.02(b), a
Certificate of the Chief Financial Officer of the Borrower (i) stating
that to the best of such officer's knowledge, no Default or Event of
Default has occurred or is continuing, or if a Default or an Event of
Default has occurred and is continuing, a statement as to the nature
thereof and the action which is proposed to be taken with respect
thereto, and (ii) showing in reasonable detail the calculations
demonstrating compliance with Sections 7.18, 7.19 and 7.20, such
certificate to be substantially in the form of Exhibit K attached
---------
hereto and otherwise in form and substance satisfactory to the Lender.
4. Subject to the other terms and conditions contained herein and
notwithstanding anything to the contrary contained in the Loan Agreement, the
Lender and the Borrower hereby agree as follows, all of which shall be satisfied
on or before the date hereof:
(a) The Borrower may obtain an Advance under the Loan in the amount
of $4,750,000.00;
(b) The Borrower shall lend $3,562,500.00 of the Advance to the Tampa
Subsidiary, which loan to the Tampa Subsidiary shall be evidenced
by a Promissory Note in the form attached hereto as Exhibit A (as
---------
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<PAGE>
amended, modified and supplemented from time to time, the
"EastGroup Tampa Note");
--------------------
(c) The Borrower shall lend $1,187,500.00 of the Advance to Westport,
which loan to Westport shall be evidenced by a promissory note in
the form attached hereto as Exhibit B (as amended, modified and
---------
supplemented from time to time, the "Westport Note");
-------------
(d) The Tampa Subsidiary and Westport shall execute and deliver, as
collateral for the EastGroup Tampa Note and the Westport Note,
the following:
(i) A Mortgage and Security Agreement in the form attached
hereto as Exhibit C (as amended, modified and supplemented
---------
from time to time, the "Mortgage");
--------
(ii) An Assignment of Leases and Rents in the form attached
hereto as Exhibit D (as amended, modified and supplemented
---------
from time to time, the "Assignment of Leases"); and
--------------------
(iii) UCC-1 Financing Statements in the forms attached hereto as
Exhibit E (as amended, modified and supplemented from time
---------
to time, the "Financing Statements").
--------------------
(e) The Borrower shall execute and deliver to the Lender a Third
Amendment to First Amended and Restated Security Agreement and an
Assignment of Mortgage and Security Agreement and Assignment of
Leases and Rents in the forms attached hereto as Exhibits F and
--------------
G, respectively, collaterally assigning to the Lender as
-
collateral for the Loan the EastGroup Tampa Note, the Westport
Note, the Mortgage, the Assignment of Leases and the Financing
Statements (collectively, the "Westport Assigned Agreements");
----------------------------
(f) The Borrower shall execute and deliver to the Lender a Second
Amendment to First Amended and Restated Stock Pledge Agreement in
the form attached hereto as Exhibit H; and
---------
(g) The Borrower shall execute and deliver or cause to be executed
and delivered to the Lender all of the other documents listed on
the Closing Agenda attached hereto as Exhibit I, all of which
---------
shall be in form and substance satisfactory to the Lender,
-3-
<PAGE>
together with all other documents deemed reasonably necessary by
the Lender to insure that the Lender has a first priority
perfected mortgage and lien on and security interest in the
Westport Assigned Agreements, the collateral referred to therein
and the Westport Commerce Center.
5. Notwithstanding anything to the contrary contained in the Loan
Agreement:
(a) All of the Westport Commerce Center shall be deemed to be an
Additional Property and all of the provisions contained in the
Loan Agreement applicable to Additional Properties shall apply to
the Westport Commerce Center, except as otherwise specifically
provided herein;
(b) All of the Westport Assigned Agreements shall be deemed to be
Assigned Agreements and all of the provisions contained in the
Loan Agreement applicable to Assigned Agreements shall apply to
the Westport Assigned Agreements, except as otherwise
specifically provided herein;
(c) The EastGroup Tampa Note and the Westport Note shall be deemed to
be Assigned Notes and all of the provisions contained in the Loan
Agreement applicable to Assigned Notes shall apply to the
EastGroup Tampa Note and the Westport Note, except as otherwise
specifically provided herein;
(d) All obligations, indebtedness and liabilities of Westport and its
general partner to the Lender under the Westport Assigned
Agreements, now existing or hereafter arising, whether direct,
indirect, related, unrelated, fixed, contingent, liquidated,
unliquidated, joint, several or joint and several, shall be
deemed to be Obligations and all of the provisions contained in
the Loan Agreement applicable to Obligations shall apply to such
obligations, indebtedness and liabilities of Westport and its
general partner, except as otherwise specifically provided
herein;
(e) Westport shall be deemed an Obligated Party and all of the
provisions contained in the Loan Agreement applicable to an
Obligated Party shall apply to Westport, except as otherwise
specifically provided herein;
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<PAGE>
(f) The Tampa Subsidiary shall be deemed a Property Subsidiary and
all of the provisions contained in the Loan Agreement and
applicable to Property Subsidiaries shall apply to the Tampa
Subsidiary, except as otherwise specifically provided herein; and
(g) All of the Westport Commerce Center shall be deemed to be a
Subsidiary Property and all of the provisions contained in the
Loan Agreement applicable to Subsidiary Properties shall apply to
the Westport Commerce Center, except as otherwise specifically
provided herein.
6. Notwithstanding anything to the contrary contained in the Loan
Agreement, Westport and its general partner shall not be deemed a Property
Subsidiary or a General Partner under the Loan Agreement.
7. Notwithstanding anything to the contrary contained in the Loan
Agreement, the Lender waives any requirement that the Borrower pledge to the
Lender the stock of EastGroup Tampa.
8. Notwithstanding anything to the contrary contained in the Loan
Agreement, the Lender waives any requirement that the Lender receive a pledge of
the partnership interests in Westport and a pledge of all of the stock of
Westport's general partner.
9. Notwithstanding anything to the contrary contained in the Loan
Agreement, in no event shall the Lender have any obligation to release all or
any part of the Westport Commerce Center from the liens of the Loan Documents
unless and until the Borrower shall have paid to the Lender in cash an amount
equal to the lesser of (a) the aggregate outstanding principal balance of the
EastGroup Tampa Note and the Westport Note or (b) sixty-five percent (65%) of
the Eligible Appraised Value of the Westport Commerce Center included in the
most recent Borrowing Base Certificate furnished to the Lender.
10. The Loan Agreement is hereby further amended by adding as Exhibit K
---------
attached thereto, the certificate attached hereto as Exhibit J.
---------
11. The Loan Agreement, as herein amended, remains in full force and
effect in accordance with its terms, and the Borrower and the Lender hereby
ratify and confirm the same. The Borrower represents and warrants that all of
the representations and warranties of the Borrower contained in the Loan
Agreement, as herein amended, are true and correct in all material respects on
and as of the date hereof and that no Default or Event of Default has occurred
and is continuing under the Loan Agreement. The
-5-
<PAGE>
Borrower acknowledges that its fully obligated under the terms of the Loan
Agreement, as herein amended, and that it has no offsets or defenses with
respect to its obligations thereunder.
12. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Mississippi.
IN WITNESS WHEREOF, the Lender and the Borrower have executed this
Agreement as of the day and year set forth above.
- LENDER -
------
DEPOSIT GUARANTY NATIONAL BANK
By:
--------------------------------
Kenneth E. Farmer,
Its Vice President
- BORROWER -
--------
EASTGROUP PROPERTIES
By:
----------------------------------
David H. Hoster II,
Its President
By:
---------------------------------
Title:
----------------------------
-6-
<PAGE>
EXHIBIT (b)(4)
SECOND AMENDMENT TO FIRST AMENDED AND
RESTATED LOAN AGREEMENT AND FIRST
AMENDMENT TO FIRST AMENDED AND
RESTATED PROMISSORY NOTE
------------------------------------
THIS SECOND AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AGREEMENT AND
FIRST AMENDMENT TO FIRST AMENDED AND RESTATED PROMISSORY NOTE (this "Agreement")
---------
is made and entered into as of the 12th day of July, 1995, by and between
EASTGROUP PROPERTIES, a Maryland real estate investment trust (the "Borrower"),
--------
and DEPOSIT GUARANTY NATIONAL BANK, a national banking association (the
"Lender").
------
WHEREAS, pursuant to that certain First Amended and Restated Loan
Agreement, dated as of June 29, 1994, as amended as of October 31, 1994 (as
amended, modified and supplemented from time to time, the "Loan Agreement"),
--------------
between the Borrower and the Lender, the Lender agreed to loan to the Borrower
an amount up to Forty-Five Million and No/100 Dollars ($45,000,000.00) (as
amended, extended and decreased from time to time, the "Loan");
----
WHEREAS, the Loan is evidenced by that certain First Amended and Restated
Promissory Note, dated as of June 29, 1994, made by the Borrower to the order of
the Lender in the principal amount of Forty-Five Million and No/100 Dollars
($45,000,000.00) (as amended, extended and decreased from time to time, the
"Note");
----
WHEREAS, the Borrower has requested, and the Lender has agreed, (a) to
reduce the Commitment, and (b) to amend the Loan Documents to provide provisions
permitting the Borrower to elect to apply Eurodollar Rates to the outstanding
principal under the Note; and
WHEREAS, the Borrower and the Lender desire to evidence their agreement in
writing and to make all necessary amendments to the Loan Agreement and the Note
in connection with the foregoing;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby
agree as follows:
1. All capitalized terms used and not otherwise defined herein (including,
without limitation, in the language amendatory to the Loan Agreement and the
Note contained herein) shall have the respective meanings given such terms in
the Loan Agreement and the Note, as applicable.
2. The Loan Agreement is hereby amended by adding the following
definitions in alphabetical order to Section 1 of the Loan Agreement:
"Eurodollar Loans" means Advances which bear interest at the
----------------
Eurodollar Rate.
"Eurodollar Rate" means an interest rate per annum equal to the sum of
---------------
(i) 2.00, plus (ii) a rate per annum determined pursuant to the following:
----
London Interbank Rate
----------------------------------------
100% minus Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means the reserve requirement
-----------------------------
<PAGE>
including any supplemental and emergency reserves (expressed as a
percentage) applicable to member banks of the Federal Reserve System in
respect of "Eurocurrency liabilities" under Regulation D of the Board of
Governors of the Federal Reserve System, or such substituted or amended
reserve requirement as made hereafter applicable to member banks of the
Federal Reserve System.
"Interest Period" shall mean, with respect to the London Interbank
---------------
Rate, a period of either thirty (30) or ninety (90) days, as selected by
the Borrower.
"London Interbank Rate" means, for any Eurodollar Loan in respect of
---------------------
any Interest Period relating thereto, the rate of interest per annum
published in The Wall Street Journal on the Business Day prior to the date
-----------------------
of the Eurodollar Loan as the "London Interbank Offered Rate (LIBOR)" for a
period equal to the applicable Interest Period. If publication of such
rate shall be suspended or terminated, London Interbank Rate shall mean,
for any Eurodollar Loan in respect of any Interest Period relating thereto,
the rate of interest per annum determined by the Lender on the date one
Business Day prior to the date of the Eurodollar Loan to be the rate for
the offering to the Lender in the London Interbank Market of United States
dollars for deposit in immediately available funds for the applicable
Interest Period and for an amount similar to the principal amount of the
requested Eurodollar Loan.
"Prime Rate Loans" means Advances which bear interest at the Prime
-----------------
Rate.
3. The Loan Agreement is hereby further amended by deleting the
definition "Advance Request Form" appearing in Section 1 of the Loan Agreement
--------------------
and by substituting in place and instead thereof the following:
"Advance Request Form" means a certificate in substantially the form
--------------------
of Exhibit A attached hereto, properly completed and signed by the
---------
Borrower, requesting an Advance and/or selection of a Eurodollar Rate as
the applicable Interest Rate.
4. The Loan Agreement is hereby further amended by deleting in its
entirety the definition "Commitment" appearing in Section 1 of the Loan
----------
Agreement and by substituting in place and instead thereof the following:
"Commitment" means the obligation of the Lender to make Advances
----------
hereunder (a) from and after the date hereof through and including July 11,
1995, in an aggregate principal amount up to but not exceeding Forty-Five
Million and No/100 Dollars ($45,000,000.00); (b) from and after July 12,
1995, through and including August 31, 1995, in an aggregate principal
amount up to but not exceeding Twenty-Seven Million and No/100 Dollars
($27,000,000.00), and (c) from and after September 1, 1995, through and
until the Termination Date, in an aggregate principal amount up to but not
exceeding Fifteen Million and No/100 Dollars ($15,000,000.00), as such
obligation may be further reduced pursuant to Section 2.09.
5. The Loan Agreement is hereby further amended by deleting the
definition "Default Rate" appearing in Section 1 of the Loan Agreement and by
------------
substituting in place and instead thereof the following:
"Default Rate" means the sum of the Prime Rate plus three (3)
------------ ----
percentage points.
-2-
<PAGE>
6. The Loan Agreement is hereby further amended by deleting the
definition "Interest Rate" appearing in Section 1 of the Loan Agreement and by
-------------
substituting in place and instead thereof the following:
"Interest Rate" means the Prime Rate or the applicable Eurodollar
-------------
Rate, as applicable.
7. The Loan Agreement is hereby further amended by deleting Section 2.03
in its entirety and by substituting in place and instead thereof the following:
Section 2.03. Interest. Subject to Section 2.05 and the terms and
--------
conditions of this Agreement, the unpaid principal amount of the Advances
shall bear interest from day to day at an annual rate of interest equal to
the Interest Rate, the selection of the applicable Interest Rate to be at
the Borrower's sole option, subject to the requirement that the Note shall
not bear interest at more than one Interest Rate at any time. The Prime
Rate shall be determined and shall take effect on the date selected by the
Borrower and shall be adjusted from day to day thereafter without notice to
the Borrower. The interest rate applicable to each Eurodollar Loan shall
be the applicable interest rate in effect on the date such Eurodollar Loan
is selected by the Borrower and effective as provided herein, and there
shall be no adjustment or modification of such interest rate during the
Interest Period applicable to such Eurodollar Loan. Interest shall be
calculated on the basis of actual days elapsed and a 360-day year. All
accrued and unpaid interest on the Advances shall be due and payable to the
Lender in arrears commencing on July 5, 1994, and continuing on each
Monthly Payment Date thereafter, on the Termination Date and at any other
maturity of the Note, however such maturity shall occur.
8. The Loan Agreement is hereby further amended by deleting in its
entirety the first sentence of Section 2.05 of the Loan Agreement and by
substituting in place and instead thereof the following:
From and after the occurrence of an Event of Default, overdue payments of
principal under the Note and (to the extent permitted by law) interest and
other amounts due thereunder, hereunder or under any of the other Loan
Documents shall bear interest, from the date the same become due and
payable and in lieu of the applicable Interest Rate, at the Default Rate,
which interest shall continue to accrue until the obligation of the
Borrower in respect to the payment thereof shall have been discharged
(whether before or after judgement).
9. The Loan Agreement is hereby further amended by deleting in its
entirety the heading for Section 2.07 and paragraphs (a), (b) and (c) of Section
2.07 of the Loan Agreement and by substituting in place and instead thereof the
following:
Section 2.07 Requests for Advances and Selection of Eurodollar Rate.
------------------------------------------------------
(a) The Borrower shall give the Lender notice by means of an
Advance Request Form of each requested Advance or selection of a Eurodollar
Rate as the applicable Interest Rate by not later than 11:00 a.m. (Jackson,
Mississippi time) on the third Business Day preceding the requested dated
of the Advance or selection specifying: (i) the
-3-
<PAGE>
requested date of such Advance or selection (which shall be a Business
Day), (ii) with respect to Advances, the amount of such Advance, and (iii)
with respect to the selection of a Eurodollar Rate as the applicable
Interest Rate, the Interest Period applicable to such new Eurodollar Loan.
Eurodollar Rate selections shall be effective only on the first Business
Day of a calendar month. If, at the end of the applicable Interest Period
for any Eurodollar Loan, the Borrower fails to select a new Interest Rate
and if applicable, Interest Period, the Borrower shall be deemed to have
designated the Eurodollar Rate for the same Interest Period as the then
expiring Interest Period as the applicable Interest Rate. In the event that
principal is outstanding under the Note and the Borrower has not selected
an Interest Rate applicable to such principal, such principal shall bear
interest at the Prime Rate.
(b) The Lender at its option may accept telephonic requests for
Advances or selections of a Eurodollar Rate, provided that such acceptance
shall not constitute a waiver of the Lender's right to require delivery of
an Advance Request Form in connection with subsequent Advances or
selections. Any telephonic request for an Advance or selection of a
Eurodollar Rate by the Borrower shall be promptly confirmed by submission
of a properly completed Advance Request Form to the Lender.
(c) All requests by the Borrower for an Advance or selection of a
Eurodollar Rate under this Section shall be irrevocable and notice under
this Section which is received by the Lender after 11:00 a.m. (Jackson,
Mississippi time) shall be deemed to have been received on the next
Business Day.
10. The Loan Agreement is hereby further amended by deleting Section 3.01
in its entirety and by substituting in place and instead thereof the following:
Section 3.01. Facility Fee and Unused Line Fee. Commencing on the
--------------------------------
date hereof and continuing on the first Business Day of each July
thereafter, until the repayment in full of all amounts due and owing
hereunder and under the Note, the Borrower shall pay to the Lender, in
advance, a facility fee equal to three-eighths percent (3/8%) of the total
Commitment in effect for the next calendar year, as such Commitment is to
be reduced as provided in the definition thereof. Commencing on October 1,
1995, and continuing on the first Business Day of each calendar quarter
thereafter until the repayment in full of all amounts due and owing
hereunder and under the Note and on the Termination Date, the Borrower
shall pay to the Lender, in arrears, an unused line fee on the amount, if
any, by which the aggregate average daily outstanding principal balance of
the Advances is less than one hundred percent (100%) of the average daily
amount of the Commitment in effect from time to time at the rate of one-
quarter of one percent (1/4%) per annum. All such calculations shall be
based on a 360-day year and the actual number of days elapsed to but not
including the payment date.
11. The Loan Agreement is hereby further amended by deleting Exhibit A
---------
attached thereto in its entirety and by substituting in place and instead
thereof Exhibit A attached hereto and made a part hereof.
---------
12. The Note is hereby amended by deleting subsection 1 of the Note in its
entirety and by substituting in place and instead thereof the following:
1. Subject to subsection 2 below, such interest shall be computed,
shall accrue and shall be due and payable as provided in the Loan
Agreement.
-4-
<PAGE>
13. The Loan Agreement and the Note, as herein amended, remain in full
force and effect in accordance with their respective terms, and the Borrower and
the Lender hereby ratify and confirm the same. The Borrower represents and
warrants that all of the representations and warranties of the Borrower
contained in the Loan Agreement, as herein amended, are true and correct in all
material respects on and as of the date hereof and that no Default or Event of
Default has occurred and is continuing under the Loan Agreement. The Borrower
acknowledges that its fully obligated under the terms of the Loan Agreement and
the Note, as herein amended, and that it has no offsets or defenses with respect
to its respective obligations thereunder.
-5-
<PAGE>
14. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Mississippi.
IN WITNESS WHEREOF, the Lender and the Borrower have executed this
Agreement as of the day and year set forth above.
- LENDER -
------
DEPOSIT GUARANTY NATIONAL BANK
By:
-----------------------------
Kenneth E. Farmer,
Its Vice President
- BORROWER -
--------
EASTGROUP PROPERTIES
By:
-----------------------------
David H. Hoster II,
Its President
By:
-----------------------------
Title:
-----------------------
-6-
<PAGE>
EXHIBIT (b)(5)
THIRD AMENDMENT TO FIRST AMENDED AND
RESTATED LOAN AGREEMENT AND SECOND
AMENDMENT TO FIRST AMENDED AND
RESTATED PROMISSORY NOTE
------------------------------------
THIS THIRD AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AGREEMENT AND
SECOND AMENDMENT TO FIRST AMENDED AND RESTATED PROMISSORY NOTE (this
"Agreement") is made and entered into as of the 1st day of June, 1996, by and
---------
between EASTGROUP PROPERTIES, a Maryland real estate investment trust (the
"Borrower"), and DEPOSIT GUARANTY NATIONAL BANK, a national banking association
--------
(the "Lender").
------
WHEREAS, pursuant to that certain First Amended and Restated Loan
Agreement, dated as of June 29, 1994, as amended as of October 31, 1994, and
July 12, 1995 (as amended, modified and supplemented from time to time, the
"Loan Agreement"), between the Borrower and the Lender, the Lender agreed to
--------------
loan to the Borrower an amount up to Forty-Five Million and No/100 Dollars
($45,000,000.00) (as amended, extended and decreased from time to time, the
"Loan");
----
WHEREAS, the Loan is evidenced by that certain First Amended and Restated
Promissory Note, dated as of June 29, 1994, as amended as of July 12, 1995, made
by the Borrower to the order of the Lender in the principal amount of Forty-Five
Million and No/100 Dollars ($45,000,000.00) (as amended, extended and decreased
from time to time, the "Note");
----
WHEREAS, the Borrower has requested, and the Lender has agreed, (a) to
reduce the Commitment, (b) to amend the Loan Documents to provide provisions
permitting the Borrower to elect to apply Eurodollar Rates to the outstanding
principal under the Note, (c) to extend the Termination Date, and (d) to make
certain other amendments to the Note and the Loan Agreement; and
WHEREAS, the Borrower and the Lender desire to evidence their agreement in
writing and to make all necessary amendments to the Loan Agreement and the Note
in connection with the foregoing;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby
agree as follows:
1. All capitalized terms used and not otherwise defined herein (including,
without limitation, in the language amendatory to the Loan Agreement and the
Note contained herein) shall have the respective meanings given such terms in
the Loan Agreement and the Note, as applicable.
2. The Loan Agreement is hereby amended by adding the following
definitions in alphabetical order to Section 1 of the Loan Agreement:
"Advance Maturity Date" means, with respect to each Advance made from
---------------------
and after June 1, 1996, the day which is twenty-four (24) calendar months
from the date such Advance is made by the Lender to the Borrower; provided,
--------
however, that, (a) whenever such date would occur on a day other than a
-------
Business Day, such date shall be extended to occur on the next succeeding
Business Day; provided, however, if such extension would cause such date to
-------- -------
occur in the next following calendar month, such
<PAGE>
Advance Maturity Date shall occur on the next preceding Business Day; and
(b) whenever such date would occur on a date for which there is no
numerically corresponding day in the relevant calendar month, such Advance
Maturity Date shall occur on the next preceding Business Day.
"Eurodollar Rate" means an interest rate per annum equal to the sum of
---------------
(i) (a) from and after July 12, 1995, through and including May 31, 1996,
2.00, and (b) from and after June 1, 1996, 1.85, plus (ii) a rate per annum
----
determined pursuant to the following:
London Interbank Rate
----------------------------------------
100% minus Eurodollar Reserve Percentage
"Eurodollar Reserve Percentage" means the reserve requirement
-----------------------------
including any supplemental and emergency reserves (expressed as a
percentage) applicable to member banks of the Federal Reserve System in
respect of "Eurocurrency liabilities" under Regulation D of the Board of
Governors of the Federal Reserve System, or such substituted or amended
reserve requirement as made hereafter applicable to member banks of the
Federal Reserve System.
"Interest Period" shall mean, with respect to the London Interbank
---------------
Rate, a period of either thirty (30) or ninety (90) days, as selected by
the Borrower.
"London Interbank Rate" means, with respect to any Interest Period,
---------------------
the rate of interest per annum published in The Wall Street Journal on the
-----------------------
Business Day prior to the effective date of the applicable Eurodollar Rate
as the "London Interbank Offered Rate (LIBOR)" for a period equal to the
applicable Interest Period. If publication of such rate shall be suspended
or terminated, London Interbank Rate shall mean, with respect to any
Interest Period, the rate of interest per annum determined by the Lender on
the Business Day prior to the effective date of the applicable Eurodollar
Rate to be the rate for the offering to the Lender in the London Interbank
Market of United States dollars for deposit in immediately available funds
for the applicable Interest Period and for an amount similar to the
outstanding principal balance under the Note.
3. The Loan Agreement is hereby further amended by deleting in its
entirety the definition "Advance Request Form" appearing in Section 1.01 of the
--------------------
Loan Agreement and by substituting in place and instead thereof the following:
"Advance Request Form" means a certificate in substantially the form
--------------------
of Exhibit A attached hereto, properly completed and signed by the
---------
Borrower, requesting an Advance and/or selection of a Eurodollar Rate as
the applicable Interest Rate.
4. The Loan Agreement is hereby further amended by deleting in its
entirety the definition "Commitment" appearing in Section 1.01 of the Loan
----------
Agreement and by substituting in place and instead thereof the following:
"Commitment" means the obligation of the Lender to make Advances
----------
hereunder (a) from and after the date hereof through and including July 11,
1995, in an aggregate principal amount up to but not exceeding Forty-Five
Million and No/100 Dollars ($45,000,000.00); (b) from and after July 12,
1995, through and including August 31, 1995, in an aggregate principal
amount up to but not exceeding Twenty-Seven Million and No/100 Dollars
($27,000,000.00), and (c) from and after September 1, 1995, through and
until the Termination Date, in an aggregate principal amount up to but not
exceeding Fifteen Million and No/100 Dollars
-2-
<PAGE>
($15,000,000.00).
5. The Loan Agreement is hereby further amended by deleting in its
entirety the definition "Default Rate" appearing in Section 1.01 of the Loan
------------
Agreement and by substituting in place and instead thereof the following:
"Default Rate" means the sum of the Prime Rate plus three (3)
------------
percentage points.
6. The Loan Agreement is hereby further amended by deleting the
definition "Interest Rate" appearing in Section 1.01 of the Loan Agreement and
-------------
by substituting in place and instead thereof the following:
"Interest Rate" means the Prime Rate or the applicable Eurodollar
-------------
Rate, as applicable.
7. The Loan Agreement is hereby further amended by deleting in its
entirety the definition "Termination Date" appearing in Section 1.01 of the Loan
Agreement and by substituting in place and instead thereof the following:
"Termination Date" means April 30, 1999, or such earlier date on which
----------------
the Commitment terminates as provided in this Agreement.
8. The Loan Agreement is hereby further amended by deleting in its
entirety Section 2.01 of the Loan Agreement and by substituting in place and
instead thereof the following:
Section 2.01. Advances. Subject to the terms and conditions of this
--------
Agreement, the Lender agrees to make one or more Advances to the Borrower
from time to time from the date hereof to and excluding the Termination
Date in an aggregate amount at any time outstanding not to exceed the
lesser of (a) the Borrowing Base or (b) the Commitment. Subject to the
foregoing limitations and the other terms and provisions of this Agreement,
the Borrower may borrow, repay and reborrow hereunder; provided, however,
-------- -------
in no event shall the Borrower at any time reduce and repay the aggregate
outstanding principal balance of all Advances hereunder to an amount less
than One Thousand and No/100 Dollars ($1,000.00).
9. The Loan Agreement is hereby further amended by deleting in its
entirety Section 2.03 of the Loan Agreement and by substituting in place and
instead thereof the following:
Section 2.03. Interest. Subject to Section 2.05 and the terms and
--------
conditions of this Agreement, the unpaid principal amount of all of the
Advances shall bear interest from day to day at an annual rate of interest
equal to the Interest Rate, the selection of the applicable Interest Rate
to be at the Borrower's sole option, subject to the requirement that the
Note shall not bear interest at more than one Interest Rate at any time.
The Prime Rate shall be determined and shall take effect on the date
selected by the Borrower and shall be adjusted from day to day thereafter
without notice to the Borrower. The Eurodollar Rate shall be determined and
take effect on the date and for the Interest Period selected by the
Borrower and there shall be no adjustment or modification of such Interest
Rate during the applicable Interest Period. In the event of the failure of
the Borrower to select an Interest Rate at the end of any applicable
Interest Period, the Borrower shall be deemed to have designated the
Eurodollar Rate for the same Interest Period as the then expiring Interest
Period as
-3-
<PAGE>
the applicable Interest Rate. In the event that any amount shall be
outstanding under the Note or any of the other Loan Documents and the
Borrower has not selected an Interest Rate applicable thereto, such amount
shall bear interest at the Prime Rate.
Interest shall be calculated on the basis of actual days elapsed and a
360-day year.
All accrued and unpaid interest on the Advances shall be due and
payable to the Lender in arrears commencing on July 5, 1994, and continuing
on each Monthly Payment Date thereafter, on the Termination Date and at any
other maturity of the Note, however such maturity shall occur.
10. The Loan Agreement is hereby further amended by deleting in its
entirety Section 2.04 of the Loan Agreement and by substituting in place and
instead thereof the following:
Section 2.04. Principal, Etc. The Borrower shall pay to the Lender
---------------
the unpaid principal amount of all Advances made from and after the date
hereof and through and including May 31, 1996, together with all accrued
and unpaid interest on such Advances on the Termination Date.
The Borrower shall pay to the Lender the unpaid principal amount of
all Advances made from and after June 1, 1996, together with all accrued
and unpaid interest on such Advances, on the earlier of (a) the Termination
Date, or (b) the Advance Maturity Date applicable to such Advance.
The Borrower shall pay to the Lender the outstanding principal balance
of all of the Advances, together with all accrued and unpaid interest on
the Advances and all other sums due and payable hereunder or under any of
the other Loan Documents, on the Termination Date.
11. The Loan Agreement is hereby further amended by deleting in its
entirety the first sentence of Section 2.05 of the Loan Agreement and by
substituting in place and instead thereof the following:
From and after the occurrence of an Event of Default, overdue payments of
principal under the Note and (to the extent permitted by law) interest and
other amounts due thereunder, hereunder or under any of the other Loan
Documents shall bear interest, from the date the same become due and
payable and in lieu of the applicable Interest Rate, at the Default Rate,
which interest shall continue to accrue until the obligations of the
Borrower in respect to the payment thereof shall have been discharged
(whether before or after judgement).
12. The Loan Agreement is hereby further amended by deleting in its
entirety Section 2.06 of the Loan Agreement and by substituting in place and
instead thereof the following:
Section 2.06 [Intentionally deleted.]
13. The Loan Agreement is hereby further amended by deleting in their
entirety the heading for Section 2.07 and paragraphs (a), (b) and (c) of Section
2.07 of the Loan Agreement and by substituting in place and instead thereof the
following:
-4-
<PAGE>
Section 2.07 Requests for Advances and Selection of Eurodollar Rate.
------------------------------------------------------
(a) The Borrower shall give the Lender notice by means of an Advance
Request Form of each requested Advance or selection of a Eurodollar Rate as
the applicable Interest Rate by not later than 11:00 a.m. (Jackson,
Mississippi time) on the third Business Day preceding the requested date of
the Advance or selection specifying: (i) the requested date of such Advance
or selection (which shall be a Business Day), (ii) with respect to
Advances, the amount of such Advance, and (iii) with respect to the
selection of a Eurodollar Rate as the applicable Interest Rate, the
Interest Period applicable to such new Eurodollar Loan. If, at the end of
any applicable Interest Period, the Borrower fails to select a new Interest
Rate and if applicable, Interest Period, the Borrower shall be deemed to
have designated the Eurodollar Rate for the same Interest Period as the
then expiring Interest Period as the applicable Interest Rate. In the event
that any amount is outstanding under the Note or any of the other Loan
Documents and the Borrower has not selected an Interest Rate applicable
thereto, such amount shall bear interest at the Prime Rate.
(b) The Lender at its option may accept telephonic requests for
Advances or selections of a Eurodollar Rate, provided that such acceptance shall
not constitute a waiver of the Lender's right to require delivery of an Advance
Request Form in connection with subsequent Advances or selections. Any
telephonic request for an Advance or selection of a Eurodollar Rate by the
Borrower shall be promptly confirmed by submission of a properly completed
Advance Request Form to the Lender.
(c) All requests by the Borrower for an Advance or selection of a
Eurodollar Rate under this Section shall be irrevocable and notice under this
Section which is received by the Lender after 11:00 a.m. (Jackson, Mississippi
time) shall be deemed to have been received on the next Business Day.
14. The Loan Agreement is hereby further amended by deleting in its
entirety Section 2.09 of the Loan Agreement and by substituting in place and
instead thereof the following:
Section 2.09 [Intentionally deleted.]
15. The Loan Agreement is hereby further amended by deleting in its
entirety Section 3.01 of the Loan Agreement and by substituting in place and
instead thereof the following:
Section 3.01. Facility Fees and Unused Line Fees. Commencing on the
----------------------------------
date hereof and continuing on the first Business Day of each July
thereafter, until the repayment in full of all amounts due and owing
hereunder and under the Note, the Borrower shall pay to the Lender, in
advance, a facility fee at the following rates: (a) from and after the date
hereof and through and including May 31, 1996, three-eighths percent (3/8%)
of the total Commitment in effect for the next calendar year, as such
Commitment is to be reduced as provided in the definition thereof, and (b)
from and after June 1, 1996, one-quarter of one percent (1/4%) of the
total Commitment in effect for the next calendar year, as such Commitment
may be reduced from time to time as provided in the definition thereof (the
facility fees referred to in this sentence being hereinafter collectively
referred to as the "Facility Fees").
-------------
Commencing on October 1, 1995, and continuing on the first Business
-5-
<PAGE>
Day of each calendar quarter thereafter until the repayment in full of all
amounts due and owing hereunder and under the Note and on the Termination
Date, the Borrower shall pay to the Lender quarterly, in arrears, an unused
line fee on the amount, if any, by which the aggregate daily outstanding
principal balance of the Advances is less than one hundred percent (100%)
of the daily amount of the Commitment in effect from time to time at the
rate of (a) from and after the date hereof, through and including May 31,
1996, one-quarter of one percent (1/4%) per annum, and (b) from and after
June 1, 1996, one-eighth of one percent (1/8%) per annum (the unused line
fees referred to in this sentence being hereinafter collectively referred
to as the "Unused Line Fees").
----------------
All such calculations shall be based on a 360-day year and the actual
number of days elapsed to but not including the payment date.
16. The Loan Agreement is hereby further amended by deleting in their
entirety Sections 7.02(a), (b) and (c) of the Loan Agreement and by substituting
in place and instead thereof the following:
(a) Annual Financial Statements. As soon as available, and in any
---------------------------
event within ninety (90) days after the end of each fiscal year of the
Borrower, beginning with the fiscal year ending December 31, 1994, a copy
of the annual audit report of the Borrower and its Subsidiaries for such
fiscal year containing, on a consolidated basis, balance sheets, statements
of income, statements of retained earnings and statements of cash flows as
at the end of such fiscal year and for the 12-month period then ended, in
each case setting forth in comparative form the figures for the preceding
fiscal year, all in reasonable detail and audited and certified by
independent certified public accountants of recognized standing acceptable
to the Lender, to the effect that such report has been prepared in
accordance with GAAP.
(b) Quarterly Financial Statements. As soon as available, and in any
------------------------------
event within forth-five (45) days after the end of each March, June and
September, a copy of an unaudited financial report of the Borrower and its
Subsidiaries as of the end of such quarter and for the portion of the
fiscal year then ended, containing, on a consolidated basis, balance
sheets, statements of income, statements of retained earnings and
statements of cash flows, in each case setting forth in comparative form
the figures for the corresponding period of the preceding fiscal year, all
in reasonable detail certified by the chief financial officer of the
Borrower to have been prepared in accordance with GAAP and to fairly and
accurately present (subject to year-end audit adjustments) the financial
condition and results of operations of the Borrower and its Subsidiaries,
on a consolidated basis, at the date and for the periods indicated therein.
(c) Quarterly Operating Statements. As soon as available, and in any
------------------------------
event within forty-five (45) days after the end of each March, June and
September and within ninety (90) days after the end of each December,
operating statements for such calendar quarter for each of the Properties,
which such operating statement shall correctly and accurately reflect the
operations of each of the Properties, shall set forth separately statements
of cash flows for each of the Properties, shall set forth separately the
property included in, the liabilities relating to and the results of
operation of, such Property, and shall be certified as accurate by the
chief financial officer of the Borrower or the respective
-6-
<PAGE>
Property Subsidiary, as applicable.
17. The Loan Agreement is hereby further amended by adding the following
to the Loan Agreement as Section 7.02(n) of the Loan Agreement.
(n) Certificate of No Default. Concurrently with the delivery of the
-------------------------
annual financial statements referred to in Section 7.02(a) and the
quarterly financial statements referred to Section 7.02(b), a Certificate
of the chief financial officer of the Borrower (i) stating that to the best
of such officer's knowledge, no Default or Event of Default has occurred or
is continuing, or if a Default or an Event of Default has occurred and is
continuing, a statement as to the nature thereof and the action which is
proposed to be taken with respect thereto, and (ii) showing in reasonable
detail the calculations demonstrating compliance with Sections 7.18, 7.19,
7.20 and 7.22, such certificate to be substantially in the form of Exhibit
-------
K attached hereto and otherwise in form and substance satisfactory to the
-
Lender.
18. The Loan Agreement is hereby further amended by deleting in its
entirety Section 7.18 of the Loan Agreement and by substituting in place and
instead thereof the following:
Section 7.18. Tangible Net Worth. From and after the date hereof and
------------------
through and until the completion of the merger of Copley Properties, Inc.
with and into the Borrower, the Borrower will at all times maintain a
Tangible Net Worth in an amount not less than Seventy-Five Million and
No/100 Dollars ($75,000,000). From and after the merger of Copley
Properties, Inc. with and into the Borrower, the Borrower will at all times
maintain a Tangible Net Worth in an amount not less than One Hundred
Thirty-Five Million and No/100 ($135,000,000).
19. The Loan Agreement is hereby further amended by deleting in their
entirety Sections 8.01 through 8.04 of the Loan Agreement and by substituting in
place and instead thereof the following:
Section 8.01 Debt. The Borrower will not incur, create, assume or
----
permit to exist, nor will the Borrower permit any of the Property
Subsidiaries or any of the General Partners to incur, create, assume or
permit to exist, any Debt, except:
(a) The Obligations;
(b) Existing Debt described on Schedule 3 attached hereto or
----------
in the financial statements described in Section 6.06;
(c) Other Debt of the types described in clauses (c), (d) and
(h) of the definition thereof;
(d) Other Debt for which the holder or creditor thereof has
recourse against the Borrower, any of the Property Subsidiaries and/or
any of the General Partners not exceeding Five Million and/No/100
Dollars ($5,000,000.00) in the aggregate outstanding at any time;
(e) Other Debt assumed by the Borrower as a result of the
merger of Copley Properties, Inc. and LNH REIT, Inc. with and into the
Borrower and listed on Schedule 3 attached hereto;
----------
-7-
<PAGE>
(f) Other Debt having a maturity date of five (5) years or
longer and for which the holder or creditor thereof does not have
recourse against the Borrower, any of the Property Subsidiaries or any
of the General Partners; and
(g) In the event that the Borrower must borrow money in order
to make the principal and interest payment to the Lender required by
the second sentence of Section 2.04, other Debt, so long as all of the
proceeds of such Debt are applied solely to make such principal and
interest payment, and for no other purpose.
Section 8.02 Limitation on Liens. The Borrower will not incur,
-------------------
create, assume or permit to exist, nor will the Borrower permit any of the
Property Subsidiaries or any of the General Partners to incur, create, assume or
permit to exist, any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired, except:
(a) Existing Liens disclosed on Schedule 5 hereto or disclosed
----------
in the financial statements described in Section 6.06, including,
without limitation, the liens disclosed on Schedule 5 attached hereto
----------
and encumbering only properties previously owned by Copley Properties,
Inc. or LNH REIT, Inc. and assumed by the Borrower as a result of the
merger of Copley Properties, Inc. and LNH REIT, Inc. with and into the
Borrower;
(b) Permitted Exceptions (as defined in the Deeds of Trust,
the Deed to Secure Debt and the mortgages and deeds of trust granted
pursuant to Section 5.02(h);
(c) Liens in favor of the Lender;
(d) Liens for taxes, assessments or other governmental charges
which are not delinquent or which are being diligently contested in
good faith and for which adequate reserves have been established in
accordance with GAAP;
(e) Liens of mechanics, materialmen, warehousemen, carriers or
other similar statutory Liens securing obligations that are not yet
due and are incurred in the ordinary course of business;
(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs
or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids or contracts (other than for payment of Debt)
in the ordinary course of business; and
(g) Liens created to secure Debt permitted by Section 8.01
provided such Liens do not encumber any of the Collateral or impair or
affect the Liens in the Collateral or the priority thereof required or
represented by this Agreement.
Section 8.03 Mergers, Acquisitions and Dissolutions. The
--------------------------------------
-8-
<PAGE>
Borrower will not, nor will the Borrower permit any of the General Partners
or any of the Property Subsidiaries to, become a party to a merger or
consolidation, or purchase or otherwise acquire all or a substantial part
of the assets of any Person (except in the ordinary course of the
Borrower's business) or any shares or other evidence of beneficial
ownership of any Person (except as permitted by Section 8.04), or dissolve
or liquidate; provided, however, that the Borrower may merge Copley
-------- -------
Properties, Inc. and LNH REIT, Inc. into and with the Borrower so long as
the Borrower continues its existence and the Borrower is the entity
surviving such mergers; and provided further, however, that one or more
-------- ------- -------
entities may merge with and into the Borrower so long as the Borrower
continues its existence and is the entity surviving such merger and
following such merger the Borrower will be in compliance with all of the
terms and provisions of this Agreement.
Section 8.04 Loans and Investments. The Borrower will not make, nor
---------------------
will the Borrower permit any of the General Partners or any of the Property
Subsidiaries to make, any advance, loan, extension of credit, or capital
contribution to or investment in, or purchase or own, or permit any General
Partner or any Property Subsidiary to purchase or own, any stock, bonds,
notes, debentures or other securities of any Person, except:
(a) Investments in Subsidiaries of the Borrower, which
Subsidiaries are owned one hundred percent (100%), directly or
indirectly, by the Borrower;
(b) Loans by the Borrower to the Property Subsidiaries which
are evidenced and secured by the Assigned Agreements;
(c) Loans and investments described on Schedule 6 hereto,
----------
including, without limitation, the investments disclosed on Schedule 6
----------
attached hereto previously owned by Copley Properties, Inc. and
acquired by the Borrower as a result of the merger of Copley
Properties, Inc. with and into the Borrower, without any increase in
the principal amount of any of such loans or further investment in any
of such investments after the date hereof;
(d) Readily marketable direct obligations of the United States
of America;
(e) Fully insured certificates of deposit, with maturities of
one year or less from the date of acquisition of any commercial bank
operating in the United States having capital and surplus in excess of
One Hundred Million and No/100 Dollars ($100,000,000.00);
(f) Commercial paper of a domestic issuer if at the time of
purchase such paper is rated in one of the two highest rating
categories of Standard and Poor's Corporation or Moody's Investors
Service; and
(g) Other loans and investments not exceeding Five Million and
No/100 Dollars ($5,000,000.00) in the aggregate at any time
outstanding.
20. The Loan Agreement is hereby further amended by adding as Exhibit K
---------
-9-
<PAGE>
attached thereto, the Certificate attached hereto as Exhibit K.
---------
21. The Loan Agreement is hereby further amended by deleting in their
entirety Exhibit A and Schedules 3, 5 and 6 attached thereto and by substituting
--------- ----------- - -
in place and instead thereof Exhibit A and Schedules 3, 5 and 6 attached hereto
--------- ----------- - -
and made a part hereof.
22. The Borrower has requested, and the Lender has agreed, that
notwithstanding anything to the contrary contained in the Loan Agreement, the
Borrower may obtain Advances under the Loan Agreement and use the proceeds of
such Advances to repay indebtedness assumed by the Borrower as a result of the
merger of Copley Properties, Inc. with and into the Borrower which indebtedness
is secured by a lien against real properties previously owned by Copley
Properties, Inc. and acquired by the Borrower as a result of the merger of
Copley Properties, Inc. with and into the Borrower; provided, however, that the
-------- -------
aggregate amount of all Advances at any one time outstanding shall not exceed
the lesser of (a) the Borrowing Base or (b) the Commitment; and provided,
--------
however, that the Borrower is not required to grant to the Lender a lien against
- -------
the real properties encumbered by the indebtedness being repaid with such
advances.
23. The Note is hereby amended by deleting subsection 1 of the Note in its
entirety and by substituting in place and instead thereof the following:
1. Subject to subsection 2 below, such interest shall be computed,
shall accrue and shall be due and payable as provided in the Loan
Agreement.
24. Notwithstanding anything to the contrary contained herein, the Lender
and the Borrower hereby acknowledge and agree that the obligation of the Lender
under this Agreement is conditioned upon the Lender receiving and approving one
or more participation agreements pursuant to which such Participants agree to
advance at least Seven Million Five Hundred Thousand and No/100 Dollars
($7,500,000) of the principal of the Note.
25. This Agreement amends, replaces and supersedes in their entirety that
certain First Amendment to First Amended and Restated Loan Agreement, dated as
of October 31, 1994, between the Borrower and the Lender and that certain Second
Amendment to First Amended and Restated Loan Agreement and First Amendment to
First Amended and Restated Promissory Note, dated as of July 12, 1995, between
the Borrower and the Lender (collectively, the "Prior Agreements"), and from and
----------------
after the date hereof this Agreement shall be in full force and effect in place
and instead of the Prior Agreements.
26. The Loan Agreement and the Note, as herein amended, remain in full
force and effect in accordance with their respective terms, and the Borrower and
the Lender hereby ratify and confirm the same. The Borrower represents and
warrants that all of the representations and warranties of the Borrower
contained in the Loan Agreement, as herein amended, are true and correct in all
material respects on and as of the date hereof and that no Default or Event of
Default has occurred and is continuing under the Loan Agreement. The Borrower
acknowledges that its fully obligated under the terms of the Loan Agreement and
the Note, as herein amended, and that it has no offsets or defenses with respect
to its respective obligations thereunder.
27. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Mississippi.
IN WITNESS WHEREOF, the Lender and the Borrower have executed this
Agreement as of the day and year set forth above.
-10-
<PAGE>
- LENDER -
------
DEPOSIT GUARANTY NATIONAL BANK
By:
----------------------------
Kenneth E. Farmer,
Its Vice President
- BORROWER -
--------
EASTGROUP PROPERTIES
By:
----------------------------
David H. Hoster II,
Its President
By:
----------------------------
Title:
----------------------
-11-
<PAGE>
EXHIBIT (b)(6)
FOURTH AMENDMENT TO FIRST AMENDED AND
RESTATED LOAN AGREEMENT
------------------------------------
THIS FOURTH AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AGREEMENT (this
"Agreement") is made and entered into as of the 27th day of March, 1997, by and
---------
between EASTGROUP PROPERTIES, a Maryland real estate investment trust (the
"Borrower"), and DEPOSIT GUARANTY NATIONAL BANK, a national banking association
--------
(the "Lender").
------
WHEREAS, pursuant to that certain First Amended and Restated Loan
Agreement, dated as of June 29, 1994, as amended as of October 31, 1994, July
12, 1995, and June 1, 1996 (as amended, modified and supplemented from time to
time, the "Loan Agreement"), between the Borrower and the Lender, the Lender
--------------
agreed to loan to the Borrower an amount up to Forty-Five Million and No/100
Dollars ($45,000,000.00) (as amended, extended and decreased from time to time,
the "Loan");
----
WHEREAS, the Loan is evidenced by that certain First Amended and Restated
Promissory Note, dated as of June 29, 1994, as amended as of July 12, 1995, made
by the Borrower to the order of the Lender in the principal amount of Forty-Five
Million and No/100 Dollars ($45,000,000.00) (as amended, extended and decreased
from time to time, the "Note");
----
WHEREAS, the Borrower has requested, and the Lender has agreed, to reduce
the Eurodollar Rate applicable to the outstanding principal under the Note; and
WHEREAS, the Borrower and the Lender desire to evidence their agreement in
writing and to make all necessary amendments to the Loan Agreement in connection
with the foregoing;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby
agree as follows:
1. All capitalized terms used and not otherwise defined herein (including,
without limitation, in the language amendatory to the Loan Agreement contained
herein) shall have the respective meanings given such terms in the Loan
Agreement.
2. The Loan Agreement is hereby amended by deleting in its entirety the
definition of "Eurodollar Rate" appearing in Section 1 of the Loan Agreement and
by substituting in place and instead thereof the following:
<PAGE>
"Eurodollar Rate" means an interest rate per annum equal to the sum of
---------------
(i) (a) from and after July 12, 1995, through and including May 31, 1996,
2.00, (b) from and after June 1, 1996, through and including March 26,
1997, 1.85, and (c) from and after March 27, 1997, 1.75, plus (ii) a rate
----
per annum determined pursuant to the following:
London Interbank Rate
----------------------------------------
100% minus Eurodollar Reserve Percentage
3. Notwithstanding anything to the contrary contained herein, the Lender
and the Borrower hereby acknowledge and agree that the obligation of the Lender
under this Agreement is conditioned upon the Participants consenting to this
Agreement.
4. The Loan Agreement, as herein amended, remains in full force and
effect in accordance with its terms, and the Borrower and the Lender hereby
ratify and confirm the same. The Borrower represents and warrants that all of
the representations and warranties of the Borrower contained in the Loan
Agreement, as herein amended, are true and correct in all material respects on
and as of the date hereof and that no Default or Event of Default has occurred
and is continuing under the Loan Agreement. The Borrower acknowledges that its
fully obligated under the terms of the Loan Agreement, as herein amended, and
that it has no offsets or defenses with respect to its obligations thereunder.
5. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Mississippi.
IN WITNESS WHEREOF, the Lender and the Borrower have executed this
Agreement as of the day and year set forth above.
- LENDER -
------
DEPOSIT GUARANTY NATIONAL BANK
By: /s/ Kenneth E. Farmer
----------------------------
Kenneth E. Farmer,
Its Vice President
-2-
<PAGE>
- BORROWER -
--------
EASTGROUP PROPERTIES
By: /s/ David H. Hoster
----------------------------
David H. Hoster II,
Its President
By: /s/ N. Keith McKey
----------------------------
Title: CFO
----------------------
-3-
<PAGE>
EXHIBIT (b)(7)
FIFTH AMENDMENT TO FIRST AMENDED AND
RESTATED LOAN AGREEMENT
------------------------------------
THIS FIFTH AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AGREEMENT (this
"Agreement") is made and entered into as of the 20th day of June, 1997, by and
- ----------
between EASTGROUP PROPERTIES, INC., a Maryland corporation and successor in
interest pursuant to merger to EastGroup Properties, a Maryland real estate
investment trust (the "Borrower"), and DEPOSIT GUARANTY NATIONAL BANK, a
--------
national banking association (the "Lender").
------
WHEREAS, pursuant to that certain First Amended and Restated Loan
Agreement, dated as of June 29, 1994, as amended as of October 31, 1994, July
12, 1995, June 1, 1996, and March 27, 1997 (as amended, modified and
supplemented from time to time, the "Loan Agreement"), between the Borrower and
--------------
the Lender, the Lender agreed to provide the Borrower a line of credit (as
amended, extended, decreased and increased from time to time, the "Loan");
----
WHEREAS, the Loan is evidenced by that certain First Amended and Restated
Promissory Note, dated as of June 29, 1994, as amended as of July 12, 1995, and
June 1, 1996, made by the Borrower to the order of the Lender in the original
principal amount of Forty-Five Million and No/100 Dollars ($45,000,000.00) (as
amended, extended, decreased and increased from time to time, the "Note");
----
WHEREAS, the Borrower has requested, and the Lender has agreed, (a) to
increase the Commitment, and (b) to make certain other amendments to the Loan
Agreement; and
WHEREAS, the Borrower and the Lender desire to evidence their agreement in
writing and to make all necessary amendments to the Loan Agreement in connection
with the foregoing;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby
agree as follows:
1. All capitalized terms used and not otherwise defined herein (including,
without limitation, in the language amendatory to the Loan Agreement contained
herein) shall have the respective meanings given such terms in the Loan
Agreement.
1. The Loan Agreement is hereby amended by deleting in its entirety the
definition "Commitment" appearing in Section 1.01 of the Loan Agreement and by
----------
substituting in place and instead thereof the following:
<PAGE>
"Commitment" means the obligation of the Lender to make Advances
----------
hereunder (a) from and after the date hereof through and including July 11,
1995, in an aggregate principal amount up to but not exceeding Forty-Five
Million and No/100 Dollars ($45,000,000.00); (b) from and after July 12,
1995, through and including August 31, 1995, in an aggregate principal
amount up to but not exceeding Twenty-Seven Million and No/100 Dollars
($27,000,000.00), (c) from and after September 1, 1995, through and until
June 19, 1997, in an aggregate principal amount up to but not exceeding
Fifteen Million and No/100 Dollars ($15,000,000.00), and (d) from and after
June 20, 1997, through and until the Termination Date, in an aggregate
principal amount up to but not exceeding Twenty Million and No/100 Dollars
($20,000,000.00).
2. The Loan Agreement is hereby further amended by deleting in its
entirety Section 3.01 of the Loan Agreement and by substituting in place and
instead thereof the following:
Section 3.01. Facility Fees and Unused Line Fees. Commencing on the
----------------------------------
date hereof and continuing on the first Business Day of each July
thereafter, until the repayment in full of all amounts due and owing
hereunder and under the Note, the Borrower shall pay to the Lender, in
advance, a facility fee at the following rates: (a) from and after the
date hereof and through and including May 31, 1996, three-eighths percent
(3/8%) of the total Commitment in effect for the next calendar year, as
such Commitment may be reduced as provided in the definition thereof, and
(b) from and after June 1, 1996, through and including June 30, 1997, one-
quarter of one percent (1/4%) of the total Commitment in effect for the
next calendar year, as such Commitment may be reduced from time to time as
provided in the definition thereof. On or before July 1, 1997, the
Borrower shall pay to the Lender an additional facility in the amount of
Fourteen Thousand One Hundred Sixty-Six and 67/100 Dollars ($14,166.67).
The facility fees referred to in this paragraph are hereinafter
collectively referred to as the "Facility Fees".
-------------
Commencing on October 1, 1995, and continuing on the first Business
Day of each calendar quarter thereafter until the repayment in full of all
amounts due and owing hereunder and under the Note and on the Termination
Date, the Borrower shall pay to the Lender quarterly, in arrears, an unused
line fee on the amount, if any, by which the aggregate daily outstanding
principal balance of the Advances is less than one hundred percent (100%)
of the daily amount of the Commitment in effect from time to time at the
rate of (a) from and after the date hereof, through and including May 31,
1996, one-quarter of one percent (1/4%) per annum, and (b) from and after
June 1, 1996, one-eighth of one percent (1/8%) per annum (the unused line
fees referred to in this sentence being hereinafter collectively referred
to as the "Unused Line Fees").
----------------
All such calculations shall be based on a 360-day year and the
-2-
<PAGE>
actual number of days elapsed to but not including the payment date.
3. The Loan Agreement, the Note and each of the other Loan Documents is
hereby amended to provide that all references to EastGroup Properties shall be
deemed to refer to EastGroup Properties, Inc., a Maryland corporation and
successor in interest pursuant to merger of EastGroup Properties. EastGroup
Properties, Inc. hereby further agrees that, as successor in interest pursuant
to merger of EastGroup Properties, EastGroup Properties, Inc. shall have all of
the rights, duties, obligations and liabilities of EastGroup Properties under
each of the Loan Documents and shall be bound by and subject to all of the terms
and provisions of Loan Documents to which EastGroup Properties is a party.
EastGroup Properties, Inc. hereby agrees to pay and perform all of the
obligations of EastGroup Properties under the Loan Agreement, the Note and each
of the other Loan Documents, all as though such Loan Agreement, Note and other
Loan Documents had originally been made, signed, executed and delivered by
EastGroup Properties, Inc.
4. Notwithstanding anything to the contrary contained herein, the Lender
and the Borrower hereby acknowledge and agree that the obligation of the Lender
under this Agreement is conditioned upon the Participants consenting to this
Agreement.
5. The Assignment Agreement and the Stock Pledge Agreement remain in full
force and effect in accordance with their respective terms, and the Borrower and
the Lender hereby ratify and confirm the same. The Borrower represents and
warrants that all of the representations and warranties of the Borrower
contained in the Assignment Agreement and the Stock Pledge Agreement are true
and correct in all material respects on and as of the date hereof and that no
Default or Event of Default has occurred and is continuing under the Stock
Pledge Agreement. The Borrower acknowledges that its fully obligated under the
terms of the Assignment Agreement and the Stock Pledge Agreement and that it has
no offsets or defenses with respect to its obligations thereunder. The Borrower
further acknowledges, ratifies and confirms that the Collateral (as such term is
defined in the Assignment Agreement) and the Pledged Securities (as such term is
defined in the Stock Pledge Agreement) continue to secure the payment and
performance of the Obligations, including, without limitation, as increased by
this Agreement.
6. The Loan Agreement, as herein amended, remains in full force and
effect in accordance with its terms, and the Borrower and the Lender hereby
ratify and confirm the same. The Borrower represents and warrants that all of
the representations and warranties of the Borrower contained in the Loan
Agreement, as herein amended, are true and correct in all material respects on
and as of the date hereof and that no Default or Event of Default has occurred
and is continuing under the Loan Agreement. The Borrower acknowledges that its
fully obligated under the terms of the Loan Agreement, as herein amended, and
that it has no offsets or defenses with respect to its obligations thereunder.
7. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of Mississippi.
-3-
<PAGE>
8. IN WITNESS WHEREOF, the Lender and the Borrower have executed this
Agreement as of the day and year set forth above.
- LENDER -
------
DEPOSIT GUARANTY NATIONAL BANK
By:
----------------------------
Kenneth E. Farmer,
Its Vice President
- BORROWER -
--------
EASTGROUP PROPERTIES, INC.
By:
----------------------------
David H. Hoster II,
Its President
By:
----------------------------
Title:
---------------------
-4-
<PAGE>
EXHIBIT (b)(8)
SIXTH AMENDMENT TO FIRST AMENDED AND
RESTATED LOAN AGREEMENT AND THIRD
AMENDMENT TO FIRST AMENDED AND
RESTATED PROMISSORY NOTE
------------------------------------
THIS SIXTH AMENDMENT TO FIRST AMENDED AND RESTATED LOAN AGREEMENT AND THIRD
AMENDMENT TO FIRST AMENDED AND RESTATED PROMISSORY NOTE (this "Agreement") is
---------
made and entered into as of the 1st day of October, 1997, by and between
EASTGROUP PROPERTIES, INC., a Maryland corporation and successor in interest
pursuant to merger to EastGroup Properties, a Maryland real estate investment
trust (the "Borrower"), and DEPOSIT GUARANTY NATIONAL BANK, a national banking
--------
association (the "Lender").
------
WHEREAS, pursuant to that certain First Amended and Restated Loan
Agreement, dated as of June 29, 1994, as amended as of October 31, 1994, July
12, 1995, June 1, 1996, March 27, 1997, and June 20, 1997 (as amended, modified
and supplemented from time to time, the "Loan Agreement"), between the Borrower
--------------
and the Lender, the Lender agreed to make a loan to the Borrower (as amended,
extended, decreased and increased from time to time, the "Loan");
----
WHEREAS, the Loan is evidenced by that certain First Amended and Restated
Promissory Note, dated as of June 29, 1994, as amended as of July 12, 1995, and
June 1, 1996, made by the Borrower to the order of the Lender in the original
principal amount of Forty-Five Million and No/100 Dollars ($45,000,000.00) (as
amended, extended, increased and decreased from time to time, the "Note");
----
WHEREAS, the Borrower has requested, and the Lender has agreed, (a) to
increase the Commitment, (b) to adjust the interest rate accruing on the
outstanding principal under the Note, (c) to extend the Termination Date, and
(d) to make certain other amendments to the Note and the Loan Agreement; and
WHEREAS, the Borrower and the Lender desire to evidence their agreement in
writing and to make all necessary amendments to the Loan Agreement and the Note
in connection with the foregoing;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby
agree as follows:
1. All capitalized terms used and not otherwise defined herein
(including, without limitation, in the language amendatory to the Loan Agreement
and the Note contained herein) shall have the respective meanings given such
terms in the Loan Agreement and the Note, as applicable.
<PAGE>
2. The Loan Agreement is hereby amended by deleting in their entirety
the defined terms "Borrowing Base," "Commitment", "Eurodollar Rate" and
"Termination Date" appearing in Section 1.01 of the Loan Agreement and by
substituting in place and instead thereof the following:
"Borrowing Base" means, at any particular time, an amount equal to
--------------
the sum of the following: (a) from and after the date hereof through and
including, October 1, 1997, (i) sixty-five percent (65%) of the aggregate
Eligible Appraised Value of the Borrower Properties, plus (ii) with respect
----
to each of the Subsidiary Properties, the lesser of (A) sixty-five percent
(65%) of the Eligible Appraised Value of the applicable Subsidiary
Property, or (B) the aggregate outstanding principal balance of the
Assigned Note or Assigned Notes, as applicable, secured by the applicable
Subsidiary Property, and (b) from and after October 1, 1997, (i) seventy-
five percent (75%) of the aggregate Eligible Appraised Value of the
Borrower Properties, plus (ii) with respect to each of the Subsidiary
----
Properties, the lesser of (A) seventy-five percent (75%) of the Eligible
Appraised Value of the applicable Subsidiary Property, or (B) the aggregate
outstanding principal balance of the Assigned Note or the Assigned Notes,
as applicable, secured by the Applicable Subsidiary Property.
"Commitment" means the obligation of the Lender to make Advances
----------
hereunder (a) from and after the date hereof through and including July 11,
1995, in an aggregate principal amount up to but not exceeding Forty-Five
Million and No/100 Dollars ($45,000,000.00); (b) from and after July 12,
1995, through and including August 31, 1995, in an aggregate principal
amount up to but not exceeding Twenty-Seven Million and No/100 Dollars
($27,000,000.00), (c) from and after September 1, 1995, through and
including June 19, 1997, in an aggregate principal amount up to but not
exceeding Fifteen Million and No/100 Dollars ($15,000,000.00); (d) from and
after June 20, 1997, through and including September 30, 1997, in an
aggregate principal amount up to but not exceeding Twenty Million and
No/100 Dollars ($20,000,000.00); (e) from and after October 1, 1997,
through and including March 31, 1998, in an aggregate principal amount up
to but not exceeding Sixty-Five Million and No/100 Dollars
($65,000,000.00); and (f) from and after April 1, 1998, through and until
the Termination Date, in an aggregate principal amount up to but not
exceeding Fifty Million and No/100 Dollars ($50,000,000.00).
"Eurodollar Rate" means an interest rate per annum equal to the sum
---------------
of (i) (a) from and after July 12, 1995, through and including May 31,
1996, 2.00, (b) from and after June 1, 1996, through and including March
26, 1997, 1.85, (c) from and after March 27, 1997, through and including
September 30, 1997, 1.75, (d) from and after October 1, 1997, through and
including March 31, 1998, with respect to (I) the outstanding principal up
to but not exceeding $48,750,000, 1.5, and (II) the outstanding principal
balance exceeding $48,750,000, 1.75, and (e) from and after April 1, 1998,
1.5, plus (ii) a rate per annum determined pursuant to the following:
----
-2-
<PAGE>
London Interbank Rate
----------------------------------------
100% minus Eurodollar Reserve Percentage
"Termination Date" means September 30, 2000, or such earlier date on
----------------
which the Commitment terminates as provided in this Agreement.
3. (a) The Loan Agreement is hereby further amended by adding the
following definitions in alphabetical order to Section 1.01 of the Loan
Agreement.
"Annual Debt Service for the Properties" means the sum of (a) annual
--------------------------------------
payments of principal and interest for a twelve (12) month period required
to amortize the principal indebtedness outstanding under the Note assuming
a twenty-five (25) year amortization schedule and an eight percent (8%)
fixed annual rate of interest, plus (b) annual payments of principal and
----
interest for such twelve (12) month period for any other loans to the
Borrower and any of the Property Subsidiaries secured by a Lien against one
or more of the Properties.
"Debt Coverage Ratio for the Properties" means the ratio of (a) (i)
--------------------------------------
the sum of Net Before Tax Income for the Properties (excluding any net
capital gain) of the Borrower and the Property Subsidiaries for the
previous twelve (12) months attributable to one or more of the Properties
in accordance with GAAAP, plus (ii) interest expense for such period
----
attributed to one or more of the Properties in accordance with GAAP, plus
----
(iii) Depreciation and amortization expense for such period attributable to
one or more of the Properties in accordance with GAAP to (b) Annual Debt
Service for the Properties.
"Net Before Tax Income for the Properties" means net profit before
----------------------------------------
taxes of the Borrower and the Property Subsidiaries on a consolidated basis
attributed to one or more of the Properties as determined in accordance
with GAAP.
4. The Loan Agreement is hereby further amended by deleting in its
entirety Section 3.01 of the Loan Agreement and by substituting in place and
instead thereof the following:
Section 3.01. Facility Fees and Unused Line Fees. Commencing on the
----------------------------------
date hereof and continuing on the first Business Day of each July
thereafter through and including June 30, 1997, the Borrower shall pay to
the Lender, in advance, a facility fee at the following rates: (a) from
and after the date hereof and through and including May 31, 1996, three-
eighths of one percent (3/8%) of the total Commitment in effect for the
next calendar year, as such Commitment is to be reduced as provided in the
definition thereof, and (b) from and after June 1, 1996, through and
including June 30, 1997, one-quarter of one percent (1/4%) of the total
Commitment in effect for the next calendar year, as
-3-
<PAGE>
such Commitment may be reduced from time to time as provided in the
definition thereof. On or before July 1, 1997, the Borrower shall pay to
the Lender an additional facility fee in the amount of Fourteen Thousand
One Hundred Sixty-six and 67/100 Dollars ($14,166.67). Commencing on
October 1, 1997, and continuing on the first Business Day of each October
thereafter, until the repayment in full of all amounts due and owing
hereunder and under the Note, the Borrower shall pay to the Lender, in
advance, a facility fee equal to one-quarter of one percent (1/4%) of the
total Commitment in effect for the next calendar year, as such Commitment
may be increased or reduced from time to time as provided in the definition
thereof. The facility fees referred to in this sentence being hereinafter
collectively referred to as the "Facility Fees".
-------------
Commencing on October 1, 1995, and continuing on the first Business
Day of each calendar quarter thereafter until the repayment in full of all
amounts due and owing hereunder and under the Note and on the Termination
Date, the Borrower shall pay to the Lender quarterly, in arrears, an unused
line fee on the amount, if any, by which the aggregate daily outstanding
principal balance of the Advances is less than one hundred percent (100%)
of the daily amount of the Commitment in effect from time to time at the
rate of (a) from and after the date hereof, through and including May 31,
1996, one-quarter of one percent (1/4%) per annum, and (b) from and after
June 1, 1996, one-eighth of one percent (1/8%) per annum (the unused line
fees referred to in this sentence being hereinafter collectively referred
to as the "Unused Line Fees").
----------------
All such calculations shall be based on a 360-day year and the actual
number of days elapsed to but not including the payment date.
5. The Loan Agreement is hereby further amended by deleting in its
entirety Section 7.18 of the Loan Agreement and by substituting in place and
instead thereof the following:
Section 7.18. Tangible Net Worth. From and after the date hereof
------------------
and through and until the completion of the merger of Copley Properties,
Inc. with and into the Borrower, the Borrower will at all times maintain a
Tangible Net Worth in an amount not less than Seventy-Five Million and
No/100 Dollars ($75,000,000). From and after the merger of Copley
Properties, Inc. with and into the Borrower through and including September
30, 1997, the Borrower will at all times maintain a Tangible Net Worth in
an amount not less than One Hundred Thirty-Five Million and No/100
($135,000,000). From and after October 1, 1997, the Borrower will at all
times maintain a Tangible Net Worth in an amount not less than One Hundred
Seventy Million and No/100 Dollars ($170,000,000.00).
6. The Loan Agreement is hereby further amended by deleting in its
entirety Section 7.20 of the Loan Agreement and by substituting in place and
-4-
<PAGE>
instead thereof the following:
Section 7.20. Debt Coverage Ratio. The Borrower will not permit the
-------------------
Debt Coverage Ratio at the end of any fiscal quarter of the Borrower to be
less than the following: (a) from and after the date hereof through and
including September 30, 1997, 1.5 to 1; and (b) from and after October 1,
1997, 1.3 to 1.
7. The Loan Agreement is hereby further amended by adding the following
to the end of Article VII of the Loan Agreement:
Section 7.22. Debt Coverage Ratio for the Properties. From and
--------------------------------------
after October 1, 1997, the Borrower will not permit the Debt Coverage Ratio
for the Properties to be less than 1.2 to 1 at the end of any fiscal
quarter of the Borrower.
8. The Loan Agreement is hereby further amended by deleting in its
entirety Exhibit A attached thereto and by substituting in place and instead
---------
thereof Exhibit A attached hereto.
---------
9. The Loan Agreement is hereby further amended by deleting in its
entirety Exhibit K attached thereto and by substituting in place and instead
---------
thereof Exhibit K attached hereto and made a part hereof.
---------
10. The Note is hereby amended by deleting in its entirety the figure
"$45,000,000.00" appearing in the top left hand corner of the first page of the
Note and by substituting in place and instead thereof the figure
"65,000,000.00."
11. The Note is hereby further amended by deleting in their entirety the
words and figures "FORTY-FIVE MILLION AND NO/100 DOLLARS ($45,000,000.00)"
appearing in the eleventh and twelfth lines of the first paragraph on the first
page of the Note and by substituting in place and instead thereof the following:
"SIXTY-FIVE MILLION AND NO/100 DOLLARS ($65,000,000.00)."
12. Notwithstanding anything to the contrary contained herein, the Lender
and the Borrower hereby acknowledge and agree that the obligations of the Lender
under this Agreement is conditioned upon the Lender receiving and approving one
or more participation agreements pursuant to which such Participants agree to
advance at least Forty-Two Million Two Hundred Fifty Thousand Dollars
($42,250,000.00) of the principal of the Note.
13. The Loan Agreement, the Note and each of the other Loan Documents is
hereby amended to provide that all references to EastGroup Properties contained
therein shall be deemed to refer to EastGroup Properties, Inc., a Maryland
corporation and successor in interest pursuant to merger of EastGroup
Properties. EastGroup Properties, Inc. hereby further agrees that, as successor
in interest pursuant to merger of EastGroup Properties, EastGroup Properties,
Inc. shall have all of the rights, duties, obligations and liabilities of
EastGroup Properties under the Loan Agreement, the Note and the other Loan
Documents to which EastGroup Properties is a party and shall be
-5-
<PAGE>
bound by and subject to all of the terms and provisions of the Loan Agreement,
the Note and the other Loan Documents to which EastGroup Properties is a party.
EastGroup Properties, Inc. hereby agrees to pay and perform all of the
obligations of EastGroup Properties under the Loan Agreement, the Note and each
of the other Loan Documents to which EastGroup Properties is a party all as
though such Loan Agreement, Note and other Loan Documents had originally been
made, assigned, executed and delivered by EastGroup Properties, Inc.
14. The Borrower and the Lender hereby further acknowledge and agree that
all references in the Loan Agreement, the Note and the other Loan Documents to
the Loan Agreement, the Note and the other Loan Documents shall be deemed to
refer to the Loan Agreement, the Note and the other Loan Documents as amended by
this Agreement.
15. The Loan Agreement, the Note and the other Loan Documents to which
the Borrower is a party, as herein amended, remain in full force and effect in
accordance with their respective terms, and the Borrower and the Lender hereby
ratify and confirm the same. The Borrower represents and warrants that all of
the representations and warranties of the Borrower contained in the Loan
Agreement and the other Loan Documents to which the Borrower is a party, as
herein amended, are true and correct in all material respects on and as of the
date hereof and that no Default or Event of Default has occurred and is
continuing under the Loan Agreement. The Borrower acknowledges that its fully
obligated under the terms of the Loan Agreement, the Note and the other Loan
Documents to which the Borrower is a party, as herein amended, and that it has
no offsets or defenses with respect to its respective obligations thereunder.
16. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Mississippi.
IN WITNESS WHEREOF, the Lender and the Borrower have executed this
Agreement on the dates set forth below their respective signatures below,
effective as of the day and year set forth above.
- LENDER -
------
DEPOSIT GUARANTY NATIONAL BANK
By:
----------------------------
Kenneth E. Farmer,
Its Senior Vice President
Date: October _____, 1997
- BORROWER -
--------
EASTGROUP PROPERTIES, INC.
By:
----------------------------
Title:
----------------------
Date: October _____, 1997
By:
----------------------------
Title:
----------------------
Date: October _____, 1997
-6-
<PAGE>
AGREEMENT AND PLAN OF MERGER
by and among
EASTGROUP PROPERTIES, INC.,
EASTGROUP-MERIDIAN, INC.
and
MERIDIAN POINT REALTY TRUST VIII CO.
Dated: February 18, 1998
<PAGE>
TABLE OF CONTENTS
ARTICLE I The Offer............................................. 1
Section 1.1 The Offer............................................. 1
Section 1.2 Company Actions....................................... 3
ARTICLE II The Merger............................................ 4
Section 2.1 The Merger............................................ 4
Section 2.2 Effective Date of the Merger.......................... 4
ARTICLE III The Surviving Corporation............................. 5
Section 3.1 Certificate of Incorporation.......................... 5
Section 3.2 Bylaws................................................ 5
Section 3.3 Board of Directors; Officers.......................... 5
Section 3.4 Effects of Merger..................................... 5
ARTICLE IV Conversion of Shares.................................. 5
Section 4.1 Merger Consideration.................................. 5
Section 4.2 Exchange of Certificates Representing Company
Preferred Shares and Company Common Shares............ 6
Section 4.3 Return of Exchange Fund............................... 7
Section 4.4 Shareholders Meeting; Preparation of Proxy 7
Statement.............................................
Section 4.5 Dissenting Shares..................................... 8
Section 4.6 Closing of the Company's Transfer Books............... 8
Section 4.7 Assistance in Consummation of the Merger.............. 9
Section 4.8 Closing............................................... 9
ARTICLE V Representations and Warranties of Purchaser........... 9
Section 5.1 Representations and Warranties of Purchaser........... 9
Section 5.2 Organization.......................................... 9
Section 5.3 Authorization of Transaction.......................... 9
Section 5.4 Noncontravention...................................... 10
Section 5.5 Brokers' Fees......................................... 10
Section 5.6 Disclosure............................................ 10
Section 5.7 Financing............................................. 10
ARTICLE VI Representations and Warranties of Sub................. 11
Section 6.1 Representations and Warranties of Sub................. 11
Section 6.2 Organization.......................................... 11
Section 6.3 Authorization of Transaction.......................... 11
Section 6.4 Noncontravention...................................... 11
i
<PAGE>
Page
----
ARTICLE VII Representations and Warranties of the Company......... 11
Section 7.1 Representations and Warranties of the Company......... 11
Section 7.2 Organization, Qualification and Corporate Power....... 12
Section 7.3 Capitalization........................................ 12
Section 7.4 Authorization of Transaction.......................... 13
Section 7.5 Noncontravention...................................... 13
Section 7.6 Filings with the Securities and Exchange Commission... 13
Section 7.7 Financial Statements.................................. 13
Section 7.8 Absence of Certain Changes............................ 14
Section 7.9 Tax Returns and Audits................................ 14
Section 7.10 Properties............................................ 15
Section 7.11 Employee Benefit Plans................................ 15
Section 7.12 Environmental Matters................................. 16
Section 7.13 Related Party Transactions............................ 16
Section 7.14 Contracts and Commitments............................. 17
Section 7.15 Disclosure............................................ 17
Section 7.16 Broker's Fees......................................... 17
Section 7.17 Shareholder Rights Plan Inapplicable.................. 17
Section 7.18 Takeover Provisions Inapplicable...................... 18
Section 7.19 Voting Requirements................................... 18
ARTICLE VIII Contingent Options of Purchaser....................... 18
Section 8.1 Grant of Common Share Option.......................... 18
Section 8.2 Grant of Preferred Share Option....................... 18
Section 8.3 Exercise of Options................................... 19
Section 8.4 Payment of Purchase Price and Delivery of
Certificates.......................................... 19
Section 8.5 Securities Act........................................ 19
Section 8.6 Adjustment upon Changes in Capitalization............. 19
ARTICLE IX Conduct of Business Pending the Merger................ 20
Section 9.1 Conduct of Business by the Company Pending the Merger. 20
Section 9.2 No Distributions...................................... 22
Section 9.3 Maintenance of REIT Status............................ 22
ARTICLE X Additional Agreements................................. 23
Section 10.1 Access and Information................................ 23
Section 10.2 Filings............................................... 23
Section 10.3 Indemnification and Insurance......................... 23
Section 10.4 HSR Act; Other Action................................. 24
Section 10.5 Additional Agreements................................. 25
ii
<PAGE>
Page
----
Section 10.6 Acquisition Proposals................................. 25
Section 10.7 Trustees.............................................. 26
Section 10.8 Payment of Fees by the Company........................ 27
ARTICLE XI Conditions Precedent.................................. 27
Section 11.1 Conditions Precedent to the Obligations of
Each Party............................................ 27
Section 11.2 Additional Conditions Precedent to the
Obligations of Purchaser and Sub If the Offer
is not Consummated.................................... 27
ARTICLE XII Termination, Amendment and Waiver..................... 29
Section 12.1 Termination........................................... 29
Section 12.2 Effect of Termination................................. 30
Section 12.3 Payment of Termination Amount......................... 30
Section 12.4 Payment to Company on Certain Termination............. 32
Section 12.5 Amendment............................................. 33
Section 12.6 Waiver................................................ 33
ARTICLE XIII General Provisions.................................... 33
Section 13.1 Non-Survival of Representations, Warranties 33
and Agreements........................................
Section 13.2 Notices............................................... 33
Section 13.3 Fees and Expenses..................................... 34
Section 13.4 Publicity............................................. 35
Section 13.5 Interpretation........................................ 35
Section 13.6 Miscellaneous......................................... 35
Section 13.7 Specific Performance.................................. 35
EXHIBIT A Conditions of the Offer
iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Merger Agreement"), dated as of
February 18, 1998 is by and among EASTGROUP PROPERTIES, INC., a Maryland
corporation ("Purchaser"), EASTGROUP-MERIDIAN, INC., a Missouri corporation and
a wholly-owned subsidiary of Purchaser ("Sub"), and MERIDIAN POINT REALTY TRUST
VIII CO., a Missouri corporation (the "Company").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Board of Directors of Purchaser and the Board of Trustees of
the Company have approved the acquisition of the Company by Purchaser;
WHEREAS, in furtherance of such acquisition, Purchaser proposes to cause
Sub to make a tender offer (as it may be amended from time to time as permitted
under this Merger Agreement, the "Offer"), to purchase all the issued and
outstanding Company Common Shares and Company Preferred Shares (both as defined
in this Merger Agreement) not owned by Sub or Purchaser at a price per Company
Common Share of $8.50 net to the seller in cash (such price, the "Common Share
Offer Price"), and at a price per Company Preferred Share of $10.00 net to the
seller in cash (such price, the "Preferred Share Offer Price"), upon the terms
and subject to the conditions set forth in this Merger Agreement; and the Board
of Trustees of the Company has approved the Offer and is recommending that the
Company's shareholders accept the Offer;
WHEREAS, the Board of Directors of Purchaser and the Board of Trustees of
the Company have approved the Offer and the merger of Sub into the Company (the
"Merger"), upon the terms and subject to the conditions set forth in the Offer
and herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein the parties hereto
agree as follows:
ARTICLE I
The Offer
Section 1.1 The Offer.
---------
(a) Subject to the provisions of this Merger Agreement, as
promptly as practicable, but in no event later than February 23, 1998, Sub
shall, and Purchaser shall cause Sub to, commence the Offer. The obligation of
Sub to, and of Purchaser to cause Sub to, commence the Offer and accept for
payment, and pay for, any Company Common Shares
1
<PAGE>
and Company Preferred Shares tendered pursuant to the Offer shall be subject to
the conditions set forth in Exhibit A (any of which, including the Minimum
Condition (as defined in Exhibit A) may be waived by Sub in its sole discretion)
and to the terms and conditions of this Merger Agreement. Sub expressly
reserves the right to modify the terms of the Offer, except that, without the
consent of the Company, Sub shall not (i) reduce the number of Company Common
Shares and Company Preferred Shares to be purchased in the Offer; (ii) reduce
the Common Share Offer Price or the Preferred Share Offer Price, except as
otherwise provided in this Merger Agreement; (iii) modify or add to the
conditions set forth in Exhibit A in any manner that the Board of Trustees of
the Company, in the exercise of its fiduciary obligations, determines to be
adverse to the holders of Company Common Shares or Company Preferred Shares;
(iv) except as provided in the next sentence, extend the Offer; (v) change the
form of consideration payable in the Offer; or (vi) amend any other term of the
Offer in a manner that the Board of Trustees of the Company, in the exercise of
its fiduciary obligations, determines to be adverse to the holders of Company
Common Shares and Company Preferred Shares. Notwithstanding the foregoing, Sub
may, without the consent of the Company, (i) extend the Offer beyond the
scheduled expiration date (the initial scheduled expiration date being 20
business days following commencement of the Offer) for a period not to exceed 20
business days, if at the scheduled expiration date of the Offer any of the
conditions to Sub's obligation to accept for payment, and pay for, Company
Common Shares and Company Preferred Shares shall not be satisfied or waived,
until such time as such conditions are satisfied or waived; or (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission (the "SEC") or the staff
thereof applicable to the Offer. Subject to the terms and conditions of the
Offer and this Merger Agreement, Sub shall, and Purchaser shall cause Sub to,
accept for payment, and pay for, all Company Common Shares and Company Preferred
Shares validly tendered and not withdrawn pursuant to the Offer that Sub becomes
obligated to accept for payment, and pay for, pursuant to the Offer as soon as
practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Purchaser and
Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer, which shall contain an offer to purchase and a related
letter of transmittal and summary advertisement (such Schedule 14D-1 and the
documents included therein pursuant to which the Offer will be made, together
with any supplements or amendments thereto, the "Offer Documents"). Purchaser
and Sub agree that the Offer Documents shall comply as to form in all material
respects with the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act"), and the Offer Documents
on the date first published, sent or given to the Company's shareholders, shall
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by Purchaser or Sub with
respect to information supplied by the Company specifically for inclusion in the
Offer Documents. Each of Purchaser, Sub and the Company agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that such information shall have become false or misleading in any
material respect, and each of Purchaser and Sub further agrees to take all steps
necessary to amend or supplement the Offer Documents and to cause the Offer
Documents as so amended or
2
<PAGE>
supplemented to be filed with the SEC and to be disseminated to the Company's
shareholders, in each case as and to the extent required by applicable Federal
securities laws. The Company and its counsel shall be given a reasonable
opportunity to review and comment upon the Offer Documents and all amendments
and supplements thereto prior to their filing with the SEC or dissemination to
shareholders of the Company. Purchaser and Sub agree to provide the Company and
its counsel any comments Purchaser, Sub or their counsel may receive from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
of such comments.
(c) Subject to the terms and conditions of the Offer,
Purchaser shall provide or cause to be provided to Sub on a timely basis the
funds necessary to accept for payment, and pay for, any Company Common Shares
and Company Preferred Shares that Sub becomes obligated to accept for payment,
and pay for, pursuant to the Offer.
Section 1.2 Company Actions.
---------------
(a) The Company hereby approves of and consents to the Offer
and represents that the Board of Trustees of the Company, at a meeting duly
called and held, duly and unanimously adopted resolutions approving the Offer
determining that the terms of the Offer are fair to, and in the best interests
of, the Company's shareholders and recommending that the Company's shareholders
accept the Offer and tender their shares pursuant to the Offer and approve and
adopt this Merger Agreement. The Company has been advised by each of its
trustees and by each executive officer who as of the date hereof is aware of the
transactions contemplated hereby, that each such person (i) intends to tender
pursuant to the Offer all Company Common Shares and Company Preferred Shares
owned by such person; or (ii) intends to vote all Company Common Shares or
Company Preferred Shares owned by such person in favor of the Merger to the
extent a shareholders' meeting is held in accordance with Section 4.4.
(b) On the date the Offer Documents are filed with the SEC,
the Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9"), containing the recommendation described in
paragraph (a) and shall mail the Schedule 14D-9 to the shareholders of the
Company. The Company agrees that the Schedule 14D-9 shall comply as to form in
all material respects with the requirements of the Exchange Act and the rules
and regulations promulgated thereunder. Each of the Company, Purchaser and Sub
agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that such information shall have become
false or misleading in any material respect, and the Company further agrees to
take all steps necessary to amend or supplement the Schedule 14D-9 and to cause
the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and
disseminated to the Company's shareholders, in each case as and to the extent
required by applicable Federal securities laws. Purchaser and its counsel shall
be given a reasonable opportunity to review and comment upon the Schedule 14D-9
and all amendments and supplements thereto prior to their filing with the SEC or
dissemination to shareholders of the Company. The Company agrees to provide
Purchaser and its counsel in writing with any comments the Company or its
counsel
3
<PAGE>
may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer, the Company shall cause its
transfer agent to furnish Sub promptly with mailing labels containing the names
and addresses of the record holders of Company Common Shares and Company
Preferred Shares as of a recent date and of those persons becoming record
holders subsequent to such date, together with copies of all lists of
shareholders, security position listings and computer files and all other
information in the Company's possession or control regarding the beneficial
owners of Company Common Shares and Company Preferred Shares, and shall furnish
to Sub such information and assistance (including updated lists of shareholders,
security position listings and computer files) as Purchaser may reasonably
request in communicating the Offer to the Company's shareholders. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Purchaser and Sub and their agents shall hold in confidence the
information contained in any such labels, listings and files, will use such
information only in connection with the Offer and the Merger and, if this Merger
Agreement shall be terminated, will, upon request, deliver, and will use their
best efforts to cause their agents to deliver, to the Company all copies of such
information then in their possession or control.
ARTICLE II
The Merger
Section 2.1 The Merger. Upon the terms and subject to the conditions
----------
hereof, on the Effective Date (as defined in Section 2.2), Sub shall be merged
into the Company and the separate existence of Sub shall thereupon cease, and
the name of the Company, as the surviving corporation in the Merger (the
"Surviving Corporation"), shall by virtue of the Merger remain Meridian Point
Realty Trust VIII Co.
Section 2.2 Effective Date of the Merger. The Merger shall become
----------------------------
effective when a properly executed Certificate of Merger is duly filed with the
Secretary of State of the State of Missouri, which filing shall be made as soon
as practicable after the closing of the transactions contemplated by this Merger
Agreement in accordance with Section 4.8. When used in this Merger Agreement,
the term "Effective Date" shall mean the date and time at which such Certificate
is so filed or at such time thereafter as is provided in such Certificate.
4
<PAGE>
ARTICLE III
The Surviving Corporation
Section 3.1 Certificate of Incorporation. The Certificate of
----------------------------
Incorporation, as amended, of the Company shall be the Certificate of
Incorporation of the Surviving Corporation after the Effective Date, and
thereafter may be amended in accordance with its terms and as provided by law
and this Merger Agreement.
Section 3.2 Bylaws. The Bylaws of the Company as in effect on the
------
Effective Date shall be the Bylaws of the Surviving Corporation.
Section 3.3 Board of Directors; Officers. The directors and officers of
----------------------------
Sub immediately prior to the Effective Date shall be the directors and officers
of the Surviving Corporation in each case until their respective successors are
duly elected and qualified.
Section 3.4 Effects of Merger. The Merger shall have the effects set
-----------------
forth in Section 351.450 of the Missouri General and Business Corporation Law
(the "GBCL").
ARTICLE IV
Conversion of Shares
Section 4.1 Merger Consideration. As of the Effective Date, by virtue of
--------------------
the Merger and without any action on the part of any holder of any common stock,
$0.001 par value per share, of the Company ("Company Common Shares"), or any
holder of any preferred stock, $0.001 par value per share, of the Company
("Company Preferred Shares"):
(a) All Company Common Shares or Company Preferred Shares
which are held by the Company or any subsidiary of the Company, and any Company
Common Shares or Company Preferred Shares owned by Purchaser and Sub, shall be
cancelled.
(b) Each Company Preferred Share issued and outstanding
immediately prior to the Effective Date, (other than Dissenting Shares (as
hereinafter defined) representing Company Preferred Shares and those Company
Preferred Shares to be canceled pursuant to Section 4.1(a)) shall, by virtue of
the Merger and without any action on the part of the Company, Purchaser, Sub or
the holders of any of the securities of any of these companies, be converted
into the right to receive from Sub in cash, without interest, the price per
Company Preferred Share paid pursuant to the Offer (the "Preferred Merger
Price").
(c) At the Effective Date, each Company Common Share issued
and outstanding immediately prior to the Effective Date (other than Dissenting
Shares representing Company Common Shares and those Company Common Shares to be
canceled pursuant to Section 4.1(a)) shall, by virtue of the Merger and without
any action on the part
5
<PAGE>
of the Company, Purchaser, Sub or the holders of any of the securities of any of
these companies, be converted into the right to receive from Sub in cash,
without interest, the price per Company Common Share paid pursuant to the Offer
(the "Common Merger Price").
(d) Each issued and outstanding share of the capital stock of
Sub shall be converted into and become one fully paid and nonassessable common
share, $0.001 par value per share, of the Surviving Corporation.
(e) As a result of the Merger and without any action on the
part of the holders thereof, all Company Preferred Shares and Company Common
Shares shall cease to be outstanding, shall be canceled and retired and shall
cease to exist and each holder of a certificate (a "Certificate") representing
any Company Preferred Shares and Company Common Shares shall thereafter cease to
have any rights with respect to such Company Preferred Shares and Company Common
Shares, except the right to receive, without interest, the Preferred Merger
Price or the Common Merger Price.
Section 4.2 Exchange of Certificates Representing Company Preferred Shares
--------------------------------------------------------------
and Company Common Shares.
- -------------------------
(a) As of the Effective Date, Purchaser shall deposit, or
shall cause to be deposited, with an exchange agent selected by Purchaser on or
prior to the Effective Date (the "Exchange Agent"), for the benefit of the
holders of Company Preferred Shares and Company Common Shares, for exchange in
accordance with this Article 4, the cash representing the aggregate of the
Preferred Merger Price and the Common Merger Price (the "Exchange Fund") to be
issued pursuant to Section 4.1 and paid pursuant to this Section 4.2,
respectively, in exchange for outstanding Company Preferred Shares and Company
Common Shares.
(b) Promptly after the Effective Date, Purchaser shall cause
the Exchange Agent to mail to each holder of record of a Certificate or
Certificates (i) a letter of transmittal which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon delivery of the Certificates to the Exchange Agent and shall be in such
form and have such other provisions as Purchaser may reasonably specify and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Preferred Merger Price and the Common Merger Price. Upon surrender of a
Certificate representing Company Preferred Shares or Company Common Shares for
cancellation to the Exchange Agent together with such letter of transmittal,
duly executed and completed in accordance with the instructions thereto, the
holder of such Certificate representing Company Preferred Shares or Company
Common Shares shall be entitled to receive in exchange therefor a check
representing cash in the amount of the Preferred Merger Price or Common Merger
Price, as appropriate, times the number of Company Preferred Shares or Company
Common Shares, respectively, represented by such Certificate(s) less any amount
required to be withheld under applicable Federal income tax laws and
regulations, and the Certificate(s) so surrendered shall forthwith be canceled.
No interest will be paid or accrued on the cash representing the Preferred
Merger Price and the Common Merger Price. In the event of a transfer of
ownership of Company Preferred Shares or Company Common Shares which is
6
<PAGE>
not registered in the transfer records of the Company, a check representing cash
in the amount of the Preferred Merger Price or Common Merger Price, as
appropriate, times the number of Company Preferred Shares or Company Common
Shares, respectively, represented by such Certificate(s) less any amount
required to be withheld under applicable Federal income tax regulations, may be
issued to such a transferee if the Certificate representing such Company
Preferred Shares or Company Common Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
to evidence that any applicable stock transfer taxes have been paid.
(c) At and after the Effective Date, there shall be no
transfers on the stock transfer books of the Company of Company Preferred Shares
or Company Common Shares which were outstanding immediately prior to the
Effective Date. If, after the Effective Date, Certificates are presented to the
Surviving Corporation, they shall be canceled and exchanged for certificates for
the amount of cash, without interest, into which the Company Preferred Shares or
the Company Common Shares theretofore represented by such Certificates shall
have been converted pursuant to this Article IV. No interest shall accrue or be
paid on any portion of the Preferred Merger Price or the Common Merger Price.
Section 4.3 Return of Exchange Fund. Any portion of the Exchange Fund
-----------------------
(including the proceeds of any investments thereof) that remains unclaimed by
the former shareholders of the Company one year after the Effective Date shall
be delivered to the Surviving Corporation. Any former shareholders of the
Company who have not theretofore complied with this Article IV shall thereafter
look only to the Surviving Corporation for payment of the cash amount, without
interest, as determined pursuant to this Article IV. None of Purchaser, Sub,
the Company, the Exchange Agent or any other person shall be liable to any
former holder of Company Preferred Shares or Company Common Shares for any
amount properly delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws. In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent or the Surviving Corporation will issue in exchange for such
lost, stolen or destroyed Certificate the cash amount, without interest, as
determined pursuant to Section 4.1.
Section 4.4 Shareholders Meeting; Preparation of Proxy Statement.
----------------------------------------------------
(a) The Company will, at Purchaser's request, duly call, give
notice of, convene and hold a meeting of the holders of Company Common Shares
and Company Preferred Shares if such meeting is required by applicable law for
the purpose of approving this Merger Agreement and the transactions contemplated
by this Merger Agreement. The Company will, through its Board of Trustees,
recommend to its shareholders approval of this Merger Agreement, the Merger and
the transactions contemplated by this Merger Agreement. At the meeting,
Purchaser shall cause all of Company Common Shares and Company Preferred Shares
then actually or beneficially owned by Purchaser, Sub or any of their
7
<PAGE>
subsidiaries to be voted in favor of the Merger. Notwithstanding the foregoing,
if Sub or any other subsidiary of Purchaser shall acquire (i) at least 90% of
the outstanding Company Common Shares and (ii) at least 90% of the outstanding
Company Preferred Shares, the parties shall, at the request of Purchaser, take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the expiration of the Offer without a meeting in
accordance with Section 351.447 of the GBCL.
(b) The Company will, at Purchaser's request, prepare and file
a preliminary Proxy Statement (the "Proxy Statement") with the SEC and will use
its best efforts to respond to any comments of the SEC or its staff and to cause
the Proxy Statement to be mailed to the Company's shareholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. The Company will notify Purchaser promptly of the receipt of any comments
from the SEC or its staff and of any requests by the SEC or its staff for
amendments or supplements to the Proxy Statement or for additional information
and will supply Purchaser with copies of all correspondence between the Company
or any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to the Proxy Statement or the Merger. If at any time
prior to the meeting there shall occur any event that should be set forth in an
amendment or supplement to the Proxy Statement, the Company will promptly
prepare and mail to its shareholders such an amendment or supplement. The
Company will not mail any Proxy Statement, or any amendment or supplement
thereto, to which Purchaser reasonably objects.
Section 4.5 Dissenting Shares. Section 351.455 of the GBCL provides
-----------------
dissenter's rights in connection with the Merger to the shareholders of the
Company. Notwithstanding anything in this Merger Agreement to the contrary, any
issued and outstanding Company Common Shares or Company Preferred Shares held by
a person (a "Dissenting Shareholder") who objects to the Merger and complies
with all the provisions of the GBCL concerning the right of holders of Company
Common Shares and Company Preferred Shares to dissent from the Merger and
require appraisal of their Company Common Shares or Company Preferred Shares
("Dissenting Shares") shall not be converted as described in Section 4.1 but
shall become the right to receive such consideration as may be determined to be
due to such Dissenting Shareholder pursuant to the laws of the State of
Missouri; provided, however, that Company Common Shares or Company Preferred
Shares outstanding immediately prior to the Effective Date and held by a
Dissenting Shareholder who shall, after the Effective Date, withdraw his demand
for appraisal or lose his right of appraisal, in either case pursuant to the
GBCL, shall be deemed to be converted as of the Effective Date, into the right
to receive the cash amount, without interest, as provided in Section 4.1(b) or
(c), as appropriate. The Company shall give Purchaser (i) prompt notice of any
demands for appraisal of Company Common Shares or Company Preferred Shares
received by the Company and (ii) the opportunity to participate in and direct
all negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of Purchaser make any payment with
respect to, or settle, offer to settle or otherwise negotiate, any such demands.
Section 4.6 Closing of the Company's Transfer Books. At the Effective
---------------------------------------
Date, each holder of a Certificate(s) theretofore representing Company Common
Shares or Company Preferred Shares shall cease to have any rights as a
shareholder of the Company and shall
8
<PAGE>
not be deemed to be a shareholder of, or be entitled to any rights of a
shareholder with respect to the Surviving Corporation but thereafter shall have
only the rights set forth in Sections 4.1, 4.2, 4.3 and 4.5. At the Effective
Date, the stock transfer books of the Company shall be closed and no transfer of
Company Common Shares or Company Preferred Shares shall be made thereafter. In
the event that, after the Effective Date, Certificates are presented to the
Surviving Corporation, they shall be cancelled and exchanged for the cash
amount, without interest, as provided in Section 4.1(b) or (c), as appropriate.
Section 4.7 Assistance in Consummation of the Merger. Purchaser, Sub and
----------------------------------------
the Company shall provide all reasonable assistance to, and shall cooperate
with, each other to bring about the consummation of the Merger as soon possible
in accordance with the terms and conditions of this Merger Agreement.
Section 4.8 Closing. The closing of the transactions contemplated by this
-------
Merger Agreement shall take place at the offices of Pruess Walker & Shanagher,
LLP, San Francisco, California at 10:00 a.m. local time on the date specified by
the parties which shall be no later than the third business day after the day on
which the last of the conditions set forth in Article XI is fulfilled or waived
or at such other time and place as Purchaser and the Company shall agree in
writing.
ARTICLE V
Representations and Warranties of Purchaser
Section 5.1 Representations and Warranties of Purchaser. The Purchaser
-------------------------------------------
represents and warrants to the Company that the statements contained in this
Merger Agreement are correct and complete as of the date of this Merger
Agreement.
Section 5.2 Organization. The Purchaser is a corporation duly organized,
------------
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.
Section 5.3 Authorization of Transaction. Purchaser has full power and
----------------------------
authority (including full corporate power and authority) to execute and deliver
this Merger Agreement and to perform its obligations hereunder. This Merger
Agreement constitutes the valid and legally binding obligation of Purchaser,
enforceable in accordance with its terms and conditions. Other than in
connection with the provisions of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), the GBCL, the Exchange Act, the
Securities Act, and the state securities laws, Purchaser does not need to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the parties to
consummate the transactions contemplated by this Merger Agreement, except to the
extent such failure to give notice to file or to obtain any authorization,
consent or approval would not have a material adverse effect on the financial
condition, properties, results of operations or business of the Purchaser or its
subsidiaries taken as a whole or except such things that would not have a
material adverse
9
<PAGE>
effect on the ability of the Purchaser to consummate the transaction
contemplated by this Merger Agreement (a "Purchaser Material Adverse Effect").
Section 5.4 Noncontravention. Neither the execution and the delivery of
----------------
this Merger Agreement, nor the consummation of the transactions contemplated
hereby, will (a) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which Purchaser is subject or any provision of
the charter or bylaws of Purchaser or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any contract, lease, sublease, license, franchise, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, security
interest, or other obligation to which Purchaser is a party or by which it is
bound or to which any of its assets is subject, except to the extent such
violation, conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice, or security interest would not have a
Purchaser Material Adverse Effect.
Section 5.5 Brokers' Fees. Other than its obligations to PaineWebber
-------------
Incorporated, Purchaser does not have any liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Merger Agreement for which any of the Company
and its subsidiaries could become liable or obligated prior to the consummation
of the Merger.
Section 5.6 Disclosure. None of the information supplied or to be
----------
supplied by Purchaser for inclusion or incorporation by reference in the Offer
Documents, the Schedule 14D-9, the Information Statement (as defined in Section
7.15) or the Proxy Statement will, in the case of the Offer Documents, the
Schedule 14D-9 and the Information Statement, at the respective times the Offer
Documents, the Schedule 14D-9 and the Information Statement are filed with the
SEC or first published, sent or given to the Company's shareholders, or, in the
case of the Proxy Statement, at the date the Proxy Statement is first mailed to
the Company's shareholders or at the time of the meeting of the Company's
shareholders held to vote on approval and adoption of this Merger Agreement,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder, except that no representation or warranty is made by
Purchaser with respect to statements made or incorporated by reference therein
based on information supplied by the Company for inclusion or incorporation by
reference therein.
Section 5.7 Financing. The Purchaser has, and at the date of consummation
---------
of the Offer will have, cash, cash equivalent assets and/or financing in an
amount sufficient to consummate the Offer.
10
<PAGE>
ARTICLE VI
Representations and Warranties of Sub
Section 6.1 Representations and Warranties of Sub. Sub represents and
-------------------------------------
warrants to the Company that the statements contained in this Merger Agreement
are correct and complete as of the date of this Merger Agreement.
Section 6.2 Organization. Sub is a corporation duly organized, validly
------------
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
Section 6.3 Authorization of Transaction. Sub has full power and
----------------------------
authority (including full corporate power and authority) to execute and deliver
this Merger Agreement and to perform its obligations hereunder. This Merger
Agreement constitutes the valid and legally binding obligation of Sub,
enforceable in accordance with its terms and conditions. Other than in
connection with the provisions of the HSR Act, the GBCL, the Exchange Act, the
Securities Act, and the state securities laws, Sub does not need to give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the parties to
consummate the transactions contemplated by this Merger Agreement.
Section 6.4 Noncontravention. Neither the execution and the delivery of
----------------
this Merger Agreement, nor the consummation of the transactions contemplated
hereby, will (a) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which Sub is subject or any provision of the
charter or bylaws of Sub or (b) conflict with, result in a breach of, constitute
a default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, security interest, or
other obligation to which Sub is a party or by which it is bound or to which any
of its assets is subject, except to the extent such violation, conflict, breach,
default, acceleration, termination, modification, cancellation, failure to give
notice, or security interest would not have a material adverse effect on the
financial condition, properties, results of operations or business of Sub or
except such things that would not have a material adverse effect on the ability
of Sub to consummate the transaction contemplated by this Merger Agreement (a
"Sub Material Adverse Effect").
ARTICLE VII
Representations and Warranties of the Company
Section 7.1 Representations and Warranties of the Company. The Company
---------------------------------------------
represents and warrants to Purchaser and Sub that the statements contained in
this Merger Agreement are correct and complete. The disclosure schedule
delivered by the Company to Purchaser and Sub concurrent with the execution of
this Merger Agreement and which constitutes a part of this Merger Agreement (the
"Disclosure Schedule") will be arranged in
11
<PAGE>
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Article VII. Any item disclosed in a particular section of the Disclosure
Schedule shall not be deemed disclosed for any purpose other than the
representation in this Merger Agreement corresponding to such section. For
purposes of this Merger Agreement, the term "Material Adverse Effect" means any
change, effect or circumstance (or any development that, insofar as can
reasonably be foreseen, is likely to result in any change, effect or
circumstance) that (i) is materially adverse to the business, properties,
assets, condition (financial or otherwise), results of operations or prospects
of the Company and its subsidiaries taken as a whole; (ii) would materially
impair the ability of the Company to perform its obligations under this Merger
Agreement; or (iii) would prevent or inhibit the timely consummation of the
Offer, the Merger or the transactions contemplated by this Merger Agreement.
Any qualification to any representation or warranty of the Company herein to the
effect that any exception to such representation or warranty has not, does not,
or would not have a Material Adverse Effect shall be deemed to mean that such
exception, together with similar exceptions to all other representations and
warranties of the Company that are so qualified, has not, does not, or would not
have a Material Adverse Effect.
Section 7.2 Organization, Qualification and Corporate Power.
-----------------------------------------------
(a) Each of the Company and its subsidiaries is a corporation
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. To the Company's knowledge, each of the
Company and its subsidiaries is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction in which the Company and its
subsidiaries own properties. Each of the Company and its subsidiaries has full
corporate power and authority to carry on the business in which it is engaged
and to own and use the properties owned and used by it.
(b) To the Company's knowledge, all the outstanding shares of
capital stock of each such subsidiary have been validly issued and are fully
paid and nonassessable and are owned by the Company, by another subsidiary of
the Company or by the Company and another subsidiary, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever. Except for the capital stock of its subsidiaries and
except for the other ownership interests set forth in the Disclosure Schedule,
the Company does not own, directly or indirectly, any capital stock or other
ownership interest in any corporation, partnership, joint venture or other
entity.
Section 7.3 Capitalization. The entire authorized capital stock of the
--------------
Company consists of 25,000,000 Company Common Shares and 25,000,000 Company
Preferred Shares. As of the date of this Merger Agreement, 1,709,937 Company
Common Shares are issued and outstanding and none are held in treasury, and
5,273,927 Company Preferred Shares are issued and outstanding and none are held
in treasury. All of the issued and outstanding Company Common Shares and
Company Preferred Shares have been duly authorized and are validly issued, fully
paid, and nonassessable. There are no outstanding or authorized options,
warrants, rights, contracts, calls, puts, rights to subscribe, conversion
rights, or other agreements or commitments to which the Company is a party or
which are binding upon the Company providing for the issuance, disposition, or
acquisition of any of its capital stock. Except for the Stock Appreciation
Rights Agreement between the Company
12
<PAGE>
and Robert H. Gidel dated September 21, 1997 (the "SAR Agreement"), there are no
outstanding or authorized stock appreciation, phantom stock, or similar rights
with respect to the Company.
Section 7.4 Authorization of Transaction. The Company has full corporate
----------------------------
power and authority to execute and deliver this Merger Agreement and to perform
its obligations hereunder; provided, however, that the Company cannot consummate
the Merger unless and until it receives the requisite Company shareholder
approval under the GBCL and the Company's Certificate of Incorporation, as
amended (the "Company's Certificate"), if such approval is required under the
GBCL. This Merger Agreement has been duly executed and delivered by the Company
and constitutes the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms and conditions.
Other than in connection with the provisions of the HSR Act, the GBCL, the
Exchange Act, the Securities Act, and the state securities laws, none of the
Company and its subsidiaries needs to give any notice to, make any filing with,
or obtain any authorization, consent, or approval of any government or
governmental agency in order for the parties hereto to consummate the
transactions contemplated by this Merger Agreement, except to the extent the
failure to give notice, to file, or to obtain any authorization, consent, or
approval would not have a Material Adverse Effect.
Section 7.5 Noncontravention. Neither the execution and the delivery of
----------------
this Merger Agreement, nor the consummation of the transactions contemplated
hereby, will (a) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which any of the Company and its subsidiaries
is subject except to the extent such violation would not have a Material Adverse
Effect; (b) violate any provision of the charter or bylaws of any of the Company
and its subsidiaries; or (c) except as set forth in the Disclosure Schedule,
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any contract, lease, sublease, license,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, security interest, or other obligation to which any
of the Company and its subsidiaries is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any security
interest upon any of its assets) except to the extent the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, failure
to give notice, or security interest would not have a Material Adverse Effect.
Section 7.6 Filings with the Securities and Exchange Commission. The
---------------------------------------------------
Company has made all filings with the SEC that it has been required to make
within the past three years under the Securities Act and the Exchange Act
(collectively the "Public Reports"). Each of the Public Reports has complied
with the Securities Act and the Exchange Act in all material respects.
Section 7.7 Financial Statements. The Company has filed a Quarterly
--------------------
Report on Form 10-Q for the fiscal quarter ended September 30, 1997 (the "Most
Recent Fiscal Quarter End"), and an Annual Report on Form 10-K for the fiscal
year ended December 31, 1996. To the Company's knowledge, the financial
statements included in or incorporated by
13
<PAGE>
reference into these Public Reports (including the related notes and schedules)
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered thereby and present
fairly in all material respects the financial condition of the Company and its
subsidiaries as of the indicated dates and the results of operations of the
Company and its subsidiaries for the indicated periods.
Section 7.8 Absence of Certain Changes. Except as disclosed in the Public
--------------------------
Reports, since December 31, 1996 through the date of this Merger Agreement, the
Company and its subsidiaries have conducted their respective businesses in the
ordinary and usual course of such businesses and there has not been (i) any
declaration, setting aside or payment of any dividend or other distribution with
respect to its capital stock; (ii) any split, combination or reclassification of
any of Company Common Shares or Company Preferred Shares or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for Company Common Shares or Company Preferred Shares; (iii)
any granting by the Company or any of its subsidiaries of any increase in
compensation, except in the ordinary course of business consistent with prior
practice; or (iv) to the Company's knowledge, any change which individually or
in the aggregate has had or is reasonably likely to have a Material Adverse
Effect.
Section 7.9 Tax Returns and Audits.
----------------------
(a) To the Company's knowledge, the Company and its
subsidiaries have timely filed or timely requested an extension for filing all
material returns, declarations, reports, estimates, information returns and
statements ("Returns") required to be filed or sent by them in respect of any
Taxes (as hereinafter defined).
(b) To the Company's knowledge, all taxes required to be
shown on Returns filed by the Company or any subsidiary as of the date hereof
(without regard to extensions) have been paid in full or adequate provision has
been made for any such Taxes on the Company's balance sheet dated as of the Most
Recent Fiscal Quarter End (in accordance with generally accepted accounting
principles), except for such Taxes that, alone or in the aggregate, do not
constitute a material amount.
(c) To the Company's knowledge, as of the date of this Merger
Agreement, there are no outstanding audit examinations, deficiencies or refund
litigation with respect to any Taxes of the Company or any subsidiary that are
reasonably likely to result in determinations that in the aggregate would have a
Material Adverse Effect. All Taxes due with respect to completed and settled
examinations or concluded litigation examinations or concluded litigation
relating to the Company have been paid in full or adequate provision has been
made for any such Taxes on the Company's balance sheet (in accordance with
generally accepted accounting principles).
(d) For its taxable year ended December 31, 1989 and at all
times thereafter up to and including the date hereof except for the taxable
years ended December 31, 1992 and 1993, the Company has qualified to be treated
as a REIT within the meaning of Sections 856-860 of the Code, including, without
limitation, the requirements of Sections 856 and 857 of the Code. To the
Company's knowledge, the Company has at all
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times except for the taxable years ended December 31, 1987, 1988, 1992 and 1993
met all requirements necessary to be treated as a REIT for purposes of the
income tax provisions of those states in which the Company is subject to income
tax and which provide for the taxation of a REIT in a manner similar to the
treatment of REITs under Sections 856-860 of the Code.
(e) To the Company's knowledge, each of the Company's
subsidiaries of which all the outstanding capital stock is owned solely by the
Company is a "Qualified REIT Subsidiary" as defined in Section 856(i) of the
Code. The Company's subsidiaries which are partnerships are, and have been at
all times, properly classified as partnerships for federal income tax purposes
and have not been classified as publicly-traded partnerships for federal income
tax purposes.
For purposes of this Merger Agreement, "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, including without limitation
all net income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding payroll, employment, excise, severance,
stamp, occupation, property or other taxes, customs, duties, fees, assessments
or charges of any kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any taxing authority (domestic
or foreign) upon the Company or any subsidiary.
Section 7.10 Properties. To the Company's knowledge, the Company has
----------
obtained all material certificates, permits and licenses from any governmental
authority having jurisdiction over any of the real estate properties owned by
the Company or any Company subsidiary (the "Company Properties") which are not
the responsibility of tenants. The Company has previously furnished to
Purchaser complete and correct copies of reports of structural engineers with
respect to each Company Property. To the Company's knowledge, other than as set
forth in such reports, there are no material structural defects or physical
damage in any Company Property or building system contained therein. Neither
the Company nor any of the subsidiaries of the Company has received any notice
to the effect that (A) any condemnation or rezoning proceedings are pending or
threatened with respect to any of the Company Properties or (B) any zoning,
building or similar law, code, ordinance, order or regulation is or will be
violated by the continued maintenance, operation or use of any buildings or
other improvements on any of the Company Properties or by the continued
maintenance, operation or use of the parking areas.
Section 7.11 Employee Benefit Plans.
----------------------
(a) Definitions. For purposes of this Section 7.11:
(i) Arrangements. The term "Arrangement" means any
------------
material written personnel policy (including, but not limited to, vacation time,
holiday pay, bonus programs, moving expense reimbursement programs and sick
leave), salary reduction agreement, change-in-control agreement, employment
agreement, stock option plan, consulting agreement or any other material written
benefit program, agreement or contract, other than a Plan.
15
<PAGE>
(ii) Plan. The term "Plan" means any employee benefit
----
plan as defined in Section 3(3) of ERISA (other than a Multiemployer Plan).
(iii) Multiemployer Plan. The term "Multiemployer
------------------
Plan" means any employee benefit plan that is a "multiemployer plan" within the
meaning of Section 3(37) of ERISA.
(iv) Control Group. The term "Control Group" means a
-------------
controlled group of corporations of which the Company is a member within the
meaning of Section 414(b) of the Code, any group of corporations or entities
under common control with the Company within the meaning of Section 414(c) of
the Code or any affiliated service group of which the Company is a member within
the meaning of Section 414(m) of the Code.
(v) ERISA. The term "ERISA" means the Employee
-----
Retirement Income Security Act of 1974, as amended.
(b) No Arrangements, Plans, or Multiemployer Plans. Neither
the Company nor any Control Group member: (i) maintains an Arrangement or Plan;
(ii) is or is expected to be liable to the Pension Benefit Guaranty Corporation
with respect to any Plan; (iii) is or has been obligated to contribute to a
Multiemployer Plan; or (iv) is or could become subject to any withdrawal
liability within the meaning of Section 4201 of ERISA with respect to a
Multiemployer Plan.
Section 7.12 Environmental Matters. The Company has previously furnished
---------------------
to Purchaser and its counsel complete and correct copies of the most recent
environmental audits, assessments and studies within the possession of the
Company or any subsidiary with respect to the Company Properties. To the
Company's knowledge, other than as set forth in such audits, assessments and
studies, there are no conditions which would violate or cause the Company to be
subject to any liability under any Environmental Laws nor has there been any
release, as defined in Environmental Laws, of Hazardous Materials (as
hereinafter defined) at, under or adjacent to any Company Property.
Environmental Laws include, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), the Resource Conservation
and Recovery Act ("RCRA"), the Clean Air Act, the Clean Water Act, the Toxic
Substances Control Act, the Emergency Planning and Community Right-to-Know Act
of 1986, the Safe Drinking Water Act and any similar or local laws and
regulations. For purposes of this Section 7.12, "Hazardous Materials" are any
materials containing any (i) "hazardous substances" as defined by CERCLA or any
similar applicable state law; (ii) petroleum, including crude oil or any
fraction thereof; (iii) natural gas, natural gas liquids or synthetic gas usable
fuel; and (iv) asbestos, polychlorinated biphenyls ("PCBs") or isomers of
dioxin.
Section 7.13 Related Party Transactions. Except for the SAR Agreement,
--------------------------
the management agreement between the Company and TIS Financial Services Inc. and
the agreement with Prudential Securities Incorporated referred to in Section
7.16, neither the Company nor any Company subsidiary has any arrangements,
agreements and contracts (which are or will be in effect as of or after the date
of this Merger Agreement) with (i) any
16
<PAGE>
consultant (excluding legal counsel, accountants and financial advisors); (ii)
any person who is an officer, trustee, director or affiliate of the Company or
any of the Company's subsidiaries, any relative of any of the foregoing or any
entity of which any of the foregoing is an affiliate; or (iii) any person who
acquired any capital stock of the Company in a private placement.
Section 7.14 Contracts and Commitments. The Disclosure Schedule sets
-------------------------
forth (i) all notes, debentures, bonds and other evidence of indebtedness which
are secured or collateralized by mortgages, deeds of trust or other security
interests in the Company Properties or personal property of the Company and each
of the Company's subsidiaries and (ii) each commitment entered into by the
Company or any of the Company's subsidiaries which may result in total payments
by or liability of the Company or any of the Company's subsidiaries in excess of
$500,000 and which may not be terminated within 90 days by the Company or the
subsidiary of the Company which is a party thereto. None of the Company or any
of the Company's subsidiaries has received any written notice of a default that
has not been cured under any of the documents described in clause (i) above or
is in default respecting any payment obligations thereunder beyond any
applicable grace periods except where such default would not have a Material
Adverse Effect. To the Company's knowledge, neither the Company nor any of the
Company's subsidiaries is in default with respect to any obligations, which
individually or in the aggregate are material, under any joint venture
agreements to which the Company or any of the Company's subsidiaries is a party.
Section 7.15 Disclosure. The Schedule 14D-9, the information statement to
----------
be filed by the Company in connection with the Offer pursuant to Rule 14f-1
promulgated under the Exchange Act (the "Information Statement") and the Proxy
Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Purchaser or Sub for inclusion or incorporation by reference therein.
Section 7.16 Broker's Fees. None of the Company and its subsidiaries has
-------------
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this Merger
Agreement except for the fees of Prudential Securities Incorporated provided for
in an agreement between the Company and Prudential Securities Incorporated dated
October 30, 1997, a complete and correct copy of which has been delivered to
Purchaser.
Section 7.17 Shareholder Rights Plan Inapplicable. As of the date hereof
------------------------------------
and at all times on or prior to the Effective Date, the Company's Shareholder
Rights Plan is, and shall be, inapplicable to the Offer, Merger and the
transactions contemplated by this Merger Agreement. The Board of Trustees of
the Company, at a meeting duly called and held, has by the vote required by
applicable law taken any necessary steps to redeem the rights issued under the
Shareholder Rights Plan or to otherwise render the Company's Shareholder Rights
Plan inapplicable to the Offer, the Merger and the transactions contemplated by
this Merger Agreement.
17
<PAGE>
Section 7.18 Takeover Provisions Inapplicable. As of the date hereof and
--------------------------------
at all times on or prior to the Effective Date, Sections 351.407 and 351.459 of
the GBCL are, and shall be, inapplicable to the Offer, Merger and the
transactions contemplated by this Merger Agreement.
Section 7.19 Voting Requirements. The affirmative vote of the holders of
-------------------
two-thirds of the outstanding Company Common Shares and Company Preferred Shares
approving this Merger Agreement is the only vote of the holders of any class or
series of the Company's capital stock necessary to approve this Merger
Agreement, and the transactions contemplated by this Merger Agreement.
ARTICLE VIII
Contingent Options of Purchaser
Section 8.1 Grant of Common Share Option. The Company hereby grants to
----------------------------
Purchaser an irrevocable option (the "Common Share Option") to purchase for a
price of $8.50 per share (the "Per Common Share Price") in cash a number of
Company Common Shares (the "Optioned Common Shares") equal to the Applicable
Common Share Amount. The "Applicable Common Share Amount" shall be the number
of Company Common Shares which, when added to the number of Company Common
Shares owned by Purchaser and Sub immediately prior to the exercise of the
Common Share Option, would result in Purchaser owning immediately after the
exercise of the Common Share Option 90% of the then outstanding Company Common
Shares. Purchaser may exercise the Common Share Option only if at the time of
exercise, it (a) shall have accepted Company Common Shares for payment pursuant
to the Offer and (b) the Minimum Condition shall have been satisfied. The
Common Share Option shall expire if not exercised prior to the earlier of the
Effective Date and 12:00 midnight, Eastern time, on the date 15 business days
after termination of the Offer.
Section 8.2 Grant of Preferred Share Option. The Company hereby grants to
-------------------------------
Purchaser an irrevocable option (the "Preferred Share Option") to purchase for a
price of $10.00 per share (the "Per Preferred Share Price") in cash a number of
Company Preferred Shares (the "Optioned Preferred Shares") equal to the
Applicable Preferred Share Amount. The "Applicable Preferred Share Amount"
shall be the number of Company Preferred Shares which, when added to the number
of Company Preferred Shares owned by Purchaser and Sub immediately prior to the
exercise of the Preferred Share Option, would result in Purchaser owning
immediately after its exercise of the Preferred Share Option 90% of the then
outstanding Company Preferred Shares. Purchaser may exercise the Preferred
Share Option only if at the time of exercise, it (a) shall have accepted Company
Preferred Shares for payment pursuant to the Offer and (b) the Minimum Condition
shall have been satisfied. The Preferred Share Option shall expire if not
exercised prior to the earlier of the Effective Date and 12:00 midnight, Eastern
time, on the date 15 business days after termination of the Offer.
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<PAGE>
Section 8.3 Exercise of Options. Provided that the conditions to exercise
-------------------
the Common Share Option set forth in Section 8.1 are satisfied, or that the
conditions to exercise the Preferred Share Option set forth in Section 8.2 are
satisfied, Purchaser may exercise either the Common Share Option or the
Preferred Share Option, respectively, only in whole at any time prior to such
expiration of such options. In the event that Purchaser wishes to exercise the
Common Share Option or the Preferred Share Option, Purchaser shall give written
notice (the date of such notice being herein called the "Notice Date") to the
Company specifying the number of Optioned Common Shares or Optioned Preferred
Shares it will purchase pursuant to such exercise and a place and date (not
later than ten business days from the Notice Date) for the closing of such
purchase.
Section 8.4 Payment of Purchase Price and Delivery of Certificates for
----------------------------------------------------------
Optioned Shares. At any closing hereunder, (a) Purchaser will make payment to
- ---------------
the Company of the full purchase price for the Optioned Common Shares or
Optioned Preferred Shares in New York Clearing House funds by certified or
official bank check payable to the order of the Company, in an amount equal to
the product of the Per Common Share Price or Per Preferred Share Price,
multiplied by the number of Optioned Common Shares or Optioned Preferred Shares,
respectively, being purchased at such closing and (b) the Company will deliver
to Purchaser a duly executed certificate or certificates representing the number
of Optioned Common Shares or Optioned Preferred Shares so purchased, registered
in the name of Purchaser or its nominee in the denomination designated by
Purchaser or its notice of exercise.
Section 8.5 Securities Act. Purchaser represents that any Optioned Common
--------------
Shares or Optioned Preferred Shares purchased by Purchaser will be acquired for
investment only and not with a view to any public distribution thereof and
Purchaser will not offer to sell or otherwise dispose of any Optioned Common
Shares or Optioned Preferred Shares so acquired by it in violation of the
registration requirements of the Securities Act.
Section 8.6 Adjustment upon Changes in Capitalization. In the event of
-----------------------------------------
any change in the number of outstanding Company Common Shares or Company
Preferred Shares by reason of any stock dividend, stock split, recapitalization,
combination, exchange of shares, merger, consolidation, reorganization or the
like or any other change in the corporate or capital structure of the Company
that would have the effect of diluting Purchaser's rights hereunder, the number
of Optioned Common Shares or the number of Optioned Preferred Shares and the Per
Common Share Price or the Per Preferred Share Price, respectively, shall be
adjusted appropriately so as to restore Purchaser to its rights hereunder with
respect to such option; provided, however, that nothing in this Section 8.6
shall be construed as permitting the Company to take any action or enter into
any transaction prohibited by this Merger Agreement.
19
<PAGE>
ARTICLE IX
Conduct of Business Pending the Merger
Section 9.1 Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
(a) Prior to the Effective Date, except as specifically
permitted by this Merger Agreement, unless the other party has consented in
writing thereto, Purchaser and the Company:
(i) Shall use their reasonable best efforts, and
shall cause each of their respective subsidiaries to use their reasonable best
efforts, to preserve intact their business organizations and goodwill and keep
available the services of their respective officers and employees;
(ii) Shall confer on a regular basis with one or more
representatives of the other to report operational matters of materiality and,
subject to Section 10.6, any proposals to engage in material transactions;
(iii) Shall promptly notify the other of any material
emergency or other material change in the condition (financial or otherwise),
business, properties, assets, liabilities, prospects or in the normal course of
their businesses or in the operation of their properties, any material
governmental complaints, investigations or hearings (or communications
indicating that the same may be contemplated), or the breach in any material
respect of any representation or warranty contained herein; and
(iv) Shall promptly deliver to the other true and
correct copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Merger Agreement.
(b) Prior to the Effective Date, unless Purchaser has
consented thereto, the Company:
(i) Shall, and shall cause each Company subsidiary
to, conduct its operations according to their usual, regular and ordinary course
in substantially the same manner as heretofore conducted, subject to clauses
(ii)-(ix) below;
(ii) Shall not, and shall cause each Company
subsidiary not to, acquire, enter into an option to acquire or exercise an
option or contract to acquire additional real property, incur additional
indebtedness, encumber assets or commence construction of, or enter into any
agreement or commitment to develop or construct, any other type of real estate
projects except for the transactions contemplated in the Disclosure Schedule;
(iii) Shall not amend the Articles or the Bylaws of the
Company, and shall cause each Company subsidiary not to amend its charter,
bylaws, joint venture documents, partnership agreements or equivalent documents
except as contemplated by this Merger Agreement;
20
<PAGE>
(iv) Shall not (A) issue any shares of its capital
stock, effect any stock split, reverse stock split, stock dividend,
recapitalization or other similar transaction, (B) grant, confer or award any
option, warrant, conversion right or other right not existing on the date hereof
to acquire any shares of its capital stock, (C) increase any compensation or
enter into or amend any employment agreement with any of its present or future
officers or trustees, or (D) adopt any new employee benefit plan (including any
stock option, stock benefit or stock purchase plan) or amend any existing
employee benefit plan in any material respect, except for changes which are less
favorable to participants in such plans;
(v) Shall not, and shall not permit any of the
Company subsidiaries to, except in accordance with and as permitted under
Section 9.1(c) hereof, sell, lease or otherwise dispose of (A) any the Company
Properties or any portion thereof or any of the capital stock of or partnership
or other interests in any of the Company subsidiaries or (B) except in the
ordinary course of business, any of its other assets which are material,
individually or in the aggregate;
(vi) Shall not, and shall not permit any of the
Company subsidiaries to, make any loans, advances or capital contributions to,
or investments in, any other person;
(vii) Shall not, and shall not permit any of the
Company subsidiaries to, pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the Company Public Reports or incurred in the ordinary
course of business consistent with past practice;
(viii) Shall not, and shall not permit any of the
Company subsidiaries to, enter into any material commitment, contractual
obligation, borrowing, capital expenditure or transaction (each, a "Commitment")
which may result in total payments or liability by or to it in excess of $50,000
other than Commitments for expenses of attorneys, accountants and investment
bankers incurred in connection with the Merger;
(ix) Shall not, and shall not permit any of the
Company subsidiaries to, enter into any Commitment with any officer, trustee,
director, consultant or affiliate of the Company or any of the Company
subsidiaries; and
(x) Shall use its best efforts to assist the
Purchaser in making contact with the financial institutions that are lenders to
the Company for the purpose of obtaining any necessary consents.
(c) the Company shall not, without the written consent of
Purchaser, which consent may not be unreasonably withheld, (i) effect any
material change in any lease or occupancy agreement currently in effect which
affects the Company Properties (together with such additional leases approved or
permitted pursuant to this
21
<PAGE>
Merger Agreement, the "Leases"); (ii) renew or extend the term of any Lease,
unless the same is an extension or expansion permitted pursuant to the terms of
an existing Lease; or (iii) enter into any new Lease or cancel or terminate any
Lease. When seeking consent to a new or modified Lease, the Company shall
provide notice of the identity of the tenant, a term sheet, letter of intent or
proposed lease containing material business terms (including, without
limitation, rent, expense base, concessions, tenant improvement allowances,
brokerage commissions, and expansion and extension options) and whatever credit
and background information, if any, the Company then possesses with respect to
such tenant. Purchaser shall be deemed to have consented to any proposed Lease
or Lease modification if it has not responded to the Company within five (5)
business days after receipt of such information. Upon Purchaser's approval or
deemed approval, the Company shall be entitled to enter into a Lease on the
standard lease form for such Company Property, without material change other
than changes customarily made to leases to other comparable tenants of the
Company Property. Purchaser hereby designates David H. Hoster II and Marshall
A. Loeb as individuals who will be available and authorized to grant Lease
approvals. Notwithstanding anything in this Merger Agreement to the contrary,
the Company may cancel or terminate any Lease or commence collection, unlawful
detainer or other remedial action against any tenant without Purchaser's consent
upon the occurrence of a default by the tenant under said Lease.
Section 9.2 No Distributions. Without the prior written consent of
----------------
Purchaser, which consent may be withheld for any reason, between the date hereof
and the Effective Date, the Company shall not declare, set aside or pay any
dividends or distributions whether in cash or property. Notwithstanding
anything to the contrary set forth in this Merger Agreement, nothing in this
Merger Agreement shall prohibit the Company or any subsidiary of the Company
from taking any action at any time or from time to time that in the reasonable
judgment of the Company is necessary for the Company to maintain its
qualification as a REIT within the meaning of Sections 856-860 of the Code for
any period or portion thereof ending on or prior to the Effective Date including
making dividend or distribution payments to shareholders; provided, however,
that no dividends or distributions required to avoid the excise tax on
undistributed REIT income under Section 4981 of the Code shall be deemed to be
necessary for the Company to maintain its qualification as a REIT within the
meaning of Sections 856-860 of the Code. In addition, the Company may declare,
set aside and pay distributions to its shareholders (i) in an amount not to
exceed $0.08 per Company Common Share and $0.08 per Company Preferred Share per
calendar quarter which distributions will have record dates and payment dates
substantially similar to such dates in 1997; or (ii) as required by the
Company's Certificate. To the extent any dividends or distributions in excess
of $0.08 per Company Common Share and $0.08 per Company Preferred Share per
quarter are paid, the Common Share Offer Price, the Preferred Share Offer Price,
the Common Merger Price and the Preferred Merger Price shall be reduced by the
cumulative per share amount of such excess.
Section 9.3 Maintenance of REIT Status. Prior to the Effective Date,
--------------------------
unless Purchaser has consented to the contrary, Company shall take any such
actions as may be necessary to maintain Company's status as a REIT for any
period or portions thereof ending on or prior to the Effective Date. Following
the Effective Date, Purchaser shall use its best
22
<PAGE>
efforts to take any such actions as may be necessary to maintain Company's
status as a REIT for any period or portion thereof ending on or prior to the
Effective Date.
ARTICLE X
Additional Agreements
Section 10.1 Access and Information. The Company and its subsidiaries
----------------------
shall afford to Purchaser and to Purchaser's accountants, counsel and other
representatives full access during normal business hours (and at such other
times as the parties may mutually agree) throughout the period prior to the
Effective Date, to all of its properties, books, contracts, commitments, records
and personnel and, during such period, the Company shall furnish promptly to
Purchaser (a) a copy of each report, schedule and other document filed or
received by it pursuant to the requirements of federal or state securities laws;
and (b) all other information concerning its business, properties and personnel
as Purchaser may reasonably request. Each of the Company, Purchaser and Sub
shall hold, and shall cause their respective employees and agents to hold, in
confidence all such information.
Section 10.2 Filings. Purchaser, Sub and the Company shall make all
-------
necessary filings with respect to the Offer and the Merger under the Securities
Act and the Exchange Act and the rules and regulations thereunder, under
applicable Blue Sky or similar securities laws and under other applicable state
or foreign securities laws, rules and regulations and shall use all reasonable
efforts to obtain required approvals and clearances with respect thereto.
Section 10.3 Indemnification and Insurance.
-----------------------------
(a) In the event of any threatened or actual claim, action,
suit, proceeding or investigation, whether civil, criminal or administrative,
including, without limitation, any such claim, action, suit, proceeding or
investigation in which any person who is now, or has been at any time prior to
the date hereof, or who becomes prior to the Effective Date, a director,
trustee, officer, employee, fiduciary or agent of the Company or any of its
subsidiaries (the "Indemnified Parties") is, or is threatened to be, made a
party based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he, she or it is or was a director, trustee,
officer, employee or agent of the Company or any of its subsidiaries, or is or
was serving at the request of the Company or any of its subsidiaries as a
director, trustee, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise; or (ii) this Merger
Agreement or any of the transactions contemplated hereby, whether in any case
asserted or arising before or after the Effective Date, the parties hereto agree
to cooperate and use their reasonable best efforts to defend against and respond
thereto. It is understood and agreed that the Company shall indemnify and hold
harmless, and after the Effective Date Purchaser shall indemnify and hold
harmless, as and to the full extent permitted by applicable law, each
Indemnified Party against any losses, claims, damages, liabilities, costs,
expenses (including attorneys' fees and expenses), judgments, fines and amounts
paid in settlement in connection with any such threatened or actual claim,
action, suit, proceeding or investigation, and in the
23
<PAGE>
event of any such threatened or actual claim, action, suit, proceeding or
investigation (whether asserted or arising before or after the Effective Date),
(i) the Company, and the Purchaser after the Effective Date, shall promptly pay
expenses in advance of the final disposition of any claim, suit, proceeding or
investigation to each Indemnified Party to the full extent permitted by law;
(ii) the Indemnified Parties may retain counsel satisfactory to them, and the
Company, and Purchaser after the Effective Date, shall pay all fees and expenses
of such counsel for the Indemnified Parties within thirty days after statements
therefor are received; and (iii) the Company and Purchaser will use their
respective reasonable best efforts to assist in the vigorous defense of any such
matter; provided, that neither the Company nor Purchaser shall be liable for any
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld); and provided further that the Purchaser shall have no
obligation hereunder to any Indemnified Party when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and non-appealable, that indemnification of such Indemnified Party
in the manner contemplated hereby is prohibited by applicable law. Any
Indemnified Party wishing to claim indemnification under this Section 10.3, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify the Company and, after the Effective Date, Purchaser, thereof, provided
that the failure to so notify shall not affect the obligations of the Company or
Purchaser except to the extent such failure to notify materially prejudices such
party.
(b) Purchaser agrees that all rights to indemnification
existing in favor, and all limitations on the personal liability, of the
Indemnified Parties provided for in the Company's Certificate or the Company's
Bylaws or the charter or bylaws or similar organizational documents of any of
its subsidiaries as in effect as of the date hereof with respect to matters
occurring prior to the Effective Date shall survive the Merger and shall
continue in full force and effect for a period of not less than three years from
the Effective Date; provided, however, that all rights to indemnification in
respect of any claim (a "Claim") asserted or made within such period shall
continue until the disposition of such Claim. At or prior to the Effective Date,
Purchaser shall purchase directors' and officers' liability insurance coverage
for the Company's trustees and officers in a form acceptable to the Company
which shall provide such trustees and officers with $10,000,000 of aggregate
coverage for three years following the Effective Date and which shall have a
retention of no more than $250,000. Purchaser may satisfy its obligations under
this Section 10.3(b) by maintaining in force the Company's present directors'
and officers' liability insurance coverage.
Section 10.4 HSR Act; Other Action. The Company, Sub and Purchaser shall,
---------------------
to the extent required, (a) use their best efforts to file as soon as
practicable notifications under the HSR Act in connection with the Merger and
the transactions contemplated hereby, and to respond as promptly as practicable
to any inquiries received from the Federal Trade Commission (the "FTC") and the
Antitrust Division of the Department of Justice (the "Antitrust Division") for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other governmental authority in connection with antitrust matters and
(b) use their best efforts to promptly take, or cause to be taken, all other
action and do, or cause to be done, all other things necessary, proper or
appropriate under applicable laws and regulations to consummate
24
<PAGE>
and make effective the transactions contemplated by this Merger Agreement as
soon as practicable including, without limitation, if such action should be
necessary to consummate the Merger or to avoid the commencement of a proceeding
to enjoin or delay consummation of the Merger by any governmental authority, the
proffer by Purchaser of its willingness to accept an order with respect to
divestiture of assets and businesses of Purchaser or the Company and/or to hold
separate such assets and businesses pending such divestiture.
Section 10.5 Additional Agreements.
---------------------
(a) Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use all reasonable efforts to take, or
cause to be taken, all actions and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Merger
Agreement, including using all reasonable efforts to obtain all necessary
waivers, consents and approvals, to effect all necessary registrations and
filings and to lift any injunction or other legal bar to the Merger subject,
however, in the case of the Merger Agreement, to the appropriate vote of the
shareholders of the Company. Notwithstanding the foregoing, there shall be no
action required to be taken and no action will be taken in order to consummate
and make effective the transactions contemplated by this Merger Agreement if
such action, either alone or together with another action, would result in a
Material Adverse Effect.
(b) In case at any time after the Effective Date any
further action is necessary or desirable to carry out the purposes of this
Merger Agreement, the proper officers, directors and/or trustees of Purchaser,
Sub and the Company shall take all such necessary action.
(c) The Company shall give prompt notice to Purchaser, and
Purchaser or Sub shall give prompt notice to the Company, of (i) any
representation or warranty made by it contained in this Merger Agreement
becoming untrue or inaccurate in any respect or (ii) the failure by it to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Merger Agreement; provided,
however, that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Merger Agreement.
Section 10.6 Acquisition Proposals.
---------------------
(a) Unless and until this Merger Agreement shall have been
terminated in accordance with its terms, the Company agrees and covenants that
(i) neither it nor any Company subsidiary shall, and each of them shall direct
and use its best efforts to cause its respective officers, trustees, directors,
employees, agents and representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of the Company
subsidiaries) not to, directly or indirectly, initiate, solicit or knowingly
encourage any inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to its shareholders) with
respect to a merger, acquisition, tender offer, exchange offer, consolidation or
similar transaction involving, or
25
<PAGE>
any purchase, sale, lease, issuance or other disposition (except as permitted
under Section 9.1 hereof) of (A) 10% or more of the assets; (B) any equity
securities (or options, rights or warrants to purchase, or securities
convertible into, such securities) representing 10% or more of the voting power;
(C) partnership interests; or (D) any transaction in which any person shall
acquire beneficial ownership (as such term is defined in Rule 13d-3 under the
Exchange Act), or the right to acquire beneficial ownership, of 10% or more of
the equity securities, of the Company or any the Company subsidiary, other than
the transactions contemplated by this Merger Agreement (any such proposal or
offer being hereinafter referred to as an "Acquisition Proposal") or engage in
any negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; (ii) the Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing and will take the necessary
steps to inform the individuals or entities referred to above of the obligations
undertaken in this Section 10.6; and (iii) the Company will notify Purchaser
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, the Company and such notification will
include the specific details with respect to any such inquiries, proposals,
requests, negotiations or discussions.
(b) Notwithstanding anything set forth in this Merger
Agreement to the contrary (i) the Board of Trustees of the Company may furnish
information to or enter into discussions or negotiations with any person or
entity that makes an unsolicited bona fide Acquisition Proposal, if, and only to
the extent that, the Board of Trustees of the Company, after consultation with
and based upon the advice of Preuss, Walker & Shanagher, LLP or another
nationally recognized law firm selected by the Board of Trustees of the Company,
determines in good faith that such action is required for the Board of Trustees
to comply with its fiduciary duties to shareholders under applicable law,
provided that prior to furnishing such information to, or entering into
discussions or negotiations with, such person or entity, the Company provides
written notice to Purchaser to the effect that it is furnishing information to,
or entering into discussions or negotiations with, such person or entity, and
the Company keeps Purchaser regularly informed of the status of any such
discussions or negotiations; and (ii) the Board of Trustees of the Company may,
to the extent applicable, comply with Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to an Acquisition Proposal.
Section 10.7 Trustees. Promptly upon the purchase by Purchaser or Sub of
--------
Company Preferred Shares and Company Common Shares pursuant to the Offer,
Purchaser shall be entitled to designate three persons to serve on the Company's
Board of Trustees, subject to compliance with Section 14(f) of the Exchange Act,
if applicable. At such time, if requested by Purchaser, the Company will also
cause each committee of the Board of Trustees of the Company to include persons
designated by Purchaser constituting the same percentage of each such committee
as Purchaser's designees are of the Board of Trustees of the Company. The
Company shall, upon request by Purchaser, promptly exercise reasonable best
efforts to secure the resignations of such number of trustees as is necessary to
enable Purchaser's designees to be elected to the Board of Trustees of the
Company in accordance
26
<PAGE>
with the terms of this Section 10.7 and to cause Purchaser's designees so to be
elected. In no event shall the Company expand the Board of Trustees so that the
total number of trustees shall exceed seven persons. The Company shall promptly
take all action necessary pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder in order to fulfill its obligations under this
Section 10.7 and shall include in the Schedule 14D-9 mailed to shareholders
promptly after the commencement of the Offer (or in an amendment thereof or the
Information Statement if Purchaser has not theretofore designated trustees) such
information with respect to the Company and its officers and trustees as is
required under Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 10.7.
Section 10.8 Payment of Fees by the Company. Promptly upon the purchase
------------------------------
by Purchaser or Sub of Company Preferred Shares and Company Common Shares
pursuant to the Offer, the Company shall pay (a) any amount owing Robert H.
Gidel under the SAR Agreement; (b) any amount owing to Prudential Securities
Incorporated under Section 7.16; and (c) the reasonable fees and disbursements
of Pruess Walker & Shanagher, LLP for services rendered to the Company.
ARTICLE XI
Conditions Precedent
Section 11.1 Conditions Precedent to the Obligations of Each Party. If
-----------------------------------------------------
the Offer is consummated, the obligations of Company, Sub and Purchaser to
effect the Merger shall be subject to the fulfillment at or prior to the
Effective Date of the following conditions:
(a) If approval of this Merger Agreement by Company
shareholders is required by law, the holders of the shares of capital stock of
the Company and the Sub entitled to vote thereon shall have duly approved this
Merger Agreement and the transactions contemplated hereby, all in accordance
with the requirements of the GBCL and the respective Certificate of
Incorporation and Bylaws of the Company and Sub.
(b) No temporary restraining order, preliminary or
permanent injunction or other order by any United States federal or state court
or governmental body which prohibits the consummation of the transaction
contemplated by this Merger Agreement shall have been issued; provided, however,
that the parties shall have used all reasonable efforts to have such order or
injunction vacated or reversed.
(c) If applicable, the waiting period (and any extension
thereof) as prescribed by the regulations promulgated under the HSR Act shall
have expired or shall have been terminated.
Section 11.2 Additional Conditions Precedent to the Obligations of
-----------------------------------------------------
Purchaser and Sub If the Offer is not Consummated. The obligations of Purchaser
- -------------------------------------------------
and Sub to effect the Merger in the event that the Offer is not consummated and
this Merger Agreement shall not have been terminated in accordance with its
terms shall be subject to (a) the conditions specified in Sections 11.1(a) and
11.1(c); and (b) the following further conditions:
27
<PAGE>
(i) there shall not be threatened or pending by any governmental
entity or any other person any suit, action or proceeding (in the case of a
suit, action or proceeding by a person other than a governmental entity, such
suit, action or proceeding having a reasonable likelihood of success), (A)
challenging the acquisition by Purchaser or Sub of any Company Common Shares or
Company Preferred Shares, seeking to restrain or prohibit the consummation of
the Merger or any of the other transactions contemplated by this Merger
Agreement, or seeking to obtain from the Company, Purchaser or Sub any damages
that are material in relation to the Company and its subsidiaries taken as a
whole; (B) seeking to prohibit or limit the ownership or operation by the
Company, Purchaser or any of their respective subsidiaries of a material portion
of the business or assets of the Company and its subsidiaries, taken as a whole,
or Purchaser and its subsidiaries, taken as a whole, or to compel the Company or
Purchaser to dispose of or hold separate any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Purchaser and
its subsidiaries, taken as a whole, as a result of the Offer, the Merger or any
of the transactions contemplated by this Merger Agreement; (C) seeking to impose
material limitations on the ability of Purchaser or Sub to acquire or hold, or
exercise full rights of ownership of, any Company Common Shares or Company
Preferred Shares including, without limitation, the right to vote such Company
Common Shares or Company Preferred Shares on all matters properly presented to
the shareholders of the Company; (D) seeking to prohibit Purchaser or any of its
subsidiaries from effectively controlling in any material respect the business
or operations of the Company or any of its subsidiaries; or (E) which otherwise
is reasonably likely to have a Material Adverse Effect;
(ii) there shall not be (A) any statute, rule, regulation,
legislation, interpretation, judgment, order or injunction threatened, proposed,
sought, enacted, entered, enforced, promulgated or deemed applicable to
Purchaser, the Company, or any of their respective subsidiaries or the Merger,
or (B) any other action taken by any governmental entity, other than the
application to the Offer or the Merger of waiting periods under the HSR Act, if
applicable, that is reasonably likely to result, directly or indirectly, in any
of the consequences referred to in clauses (A) through (E) of paragraph (i)
above;
(iii) (A) the Board of Trustees of the Company or any committee
thereof shall not have withdrawn or modified in a manner adverse to Purchaser or
Sub its approval or recommendation of the Offer, the Merger or this Merger
Agreement;
(iv) there shall not have occurred (A) any general suspension of
trading in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States (excluding any
coordinated trading halt triggered solely as a result of a specified decrease in
a market index); (B) any extraordinary or material adverse change in the
financial market or major stock exchange indices in the United States; (C) any
material adverse change in United States currency exchange rates or a suspension
of, or limitation on, the markets therefor; (D) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States; (E) any limitation (whether or not mandatory) by any governmental entity
on, or other event that might materially affect, the extension of credit by
banks or other lending institutions; or (F) in the case of any of the foregoing
existing on the date of this Merger Agreement, a material acceleration or
worsening thereof;
28
<PAGE>
(v) all of the representations and warranties of the Company set
forth in this Merger Agreement shall be true and correct as of the date of the
Merger Agreement and as of the Effective Date in all material respects (except
to the extent such representations and warranties expressly relate to an earlier
date); and
(vi) the Company shall not have failed to perform in any material
respect any obligation or to comply in any material respect with any agreement
or covenant of the Company to be performed or complied with by it under this
Merger Agreement.
ARTICLE XII
Termination, Amendment and Waiver
Section 12.1 Termination. This Merger Agreement may be terminated at any
-----------
time prior to the Effective Date, whether before or after approval by the
shareholders of the Company:
(a) by mutual consent of the Board of Directors of Purchaser
and the Board of Trustees of the Company;
(b) by either Purchaser or the Company if the Merger shall
not have been consummated on or before August 31, 1998 (provided the terminating
party is not otherwise in material breach of its representations, warranties or
obligations under this Merger Agreement);
(c) by the Company if any of the conditions specified in
Article XI have not been met or waived by the Company at such time as such
condition is no longer capable of satisfaction as long as the Company is not in
breach of the Merger Agreement;
(d) by Purchaser or Sub if (i) any of the conditions
specified in Article XI have not been met or waived by Purchaser at such time as
such condition is no longer capable of satisfaction or (ii) there shall not have
been a sufficient number of Company Common Shares and Company Preferred Shares
tendered pursuant to the Offer in order to satisfy the Minimum Condition on or
before April 30, 1998, as long as the Purchaser is not in breach of the Merger
Agreement;
(e) by Purchaser or Sub if either Purchaser or Sub is
entitled to terminate the Offer as a result of the occurrence of any event set
forth in paragraph (c) of Exhibit A to this Merger Agreement;
(f) by the Company, if the Board of Trustees of the Company
recommends to the Company's shareholders approval or acceptance of an
Acquisition Proposal in accordance with Section 10.6 hereof; and
29
<PAGE>
(g) by the Company, if either Purchaser or Sub is in material
breach of its obligations under this Merger Agreement and such material breach
shall not have been cured by Purchaser or Sub within five days after Purchaser
or Sub receives notice thereof.
Section 12.2 Effect of Termination.
---------------------
(a) In the event of termination of this Merger Agreement by
either Purchaser or the Company, as provided above, this Merger Agreement shall
forthwith become void and (except for the willful breach of this Merger
Agreement by any party hereto) there shall be no liability on the part of either
the Company, Purchaser or Sub or their respective officers, trustees or
directors; provided that Sections 12.2, 12.3, 12.4, 13.3 and 13.6 and the last
sentence of Section 10.1 shall survive the termination.
(b) If (x) Purchaser terminates this Merger Agreement
pursuant to Section 12.1(e), or pursuant to Section 12.1(b) as a result of a
willful breach by the Company; or
(y) the Company terminates this Merger Agreement pursuant
to Section 12.1(f); or
(z) during the pendency of the Offer a third party
announces or proposes an Acquisition Proposal and Purchaser terminates this
Merger Agreement under Section 12.1(d)(ii) and the Company thereafter
consummates or enters into an agreement to consummate an Acquisition Proposal
(with such third party or otherwise) within the one year period after such
termination of this Merger Agreement;
then the Company shall pay to Purchaser an amount (the
"Termination Amount") in cash equal to the sum of (i) $2,500,000, plus (ii)
Purchaser's reasonable out-of-pocket costs and expenses in connection with this
Merger Agreement and the transactions contemplated hereby, evidenced by
documentation reasonably acceptable to the Company, in accordance with the
provisions of Section 12.3.
(c) The parties acknowledge and agree that the provisions for
payment of the Termination Amount are included herein in order to induce
Purchaser to enter into this Merger Agreement and to reimburse Purchaser for
incurring the costs and expenses related to entering into this Merger Agreement
and consummating the transactions contemplated by this Merger Agreement. The
parties hereto agree that the payment of the Termination Amount by the Company
to Purchaser shall constitute liquidated damages with respect to any claim for
damages which would otherwise be entitled to assert against the Company with
respect to this Merger Agreement and the transactions contemplated hereby and
shall constitute the only remedy to which Purchaser shall be entitled in
connection therewith.
Section 12.3 Payment of Termination Amount.
-----------------------------
(a) In the event that the Company is obligated to pay
Purchaser the Termination Amount pursuant to Section 12.2 (the "Section 12.2
Amount"), the Company
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<PAGE>
shall pay to Purchaser from the applicable Section 12.2 Amount deposited into
escrow in accordance with the next sentence, an amount equal to the lesser of
(i) the Section 12.2 Amount and (ii) the sum of (A) the maximum amount that can
be paid to Purchaser without causing Purchaser to fail to meet the requirements
of Sections 856(c)(2) and (3) of the Code determined as if the payment of such
amount did not constitute income described in Sections 856(c)(2)(A)-(H) or
856(c)(3)(A)-(I) of the Code ("Qualifying Income"), as determined by Purchaser's
certified public accountants, plus (B) in the event Purchaser receives either
(1) a letter from Purchaser's counsel indicating that Purchaser has received a
ruling from the Internal Revenue Service (the "IRS") described in Section
12.3(b)(ii) or (2) an opinion from Purchaser's counsel as described in Section
12.3(b)(ii), an amount equal to the Section 12.2 Amount less the amount payable
under clause (A) above. To secure the Company's obligation to pay these
amounts, the Company shall deposit into escrow an amount in cash equal to the
Section 12.2 Amount with an escrow agent selected by Purchaser and on such terms
(subject to Section 12.3(b)) as shall be agreed upon by Purchaser and the escrow
agent. The payment or deposit into escrow of the Section 12.2 Amount pursuant
to this Section 12.3(a) shall be made within three days of the event which gives
rise to the payment of the Section 12.2 Amount by wire transfer or bank check.
(b) The escrow agreement shall provide that the Section 12.2
Amount in escrow or any portion thereof shall not be released to Purchaser
unless the escrow agent receives any one or combination of the following: (i) a
letter from Purchaser's certified public accountants indicating the maximum
amount that can be paid by the escrow agent to Purchaser without causing
Purchaser to fail to meet the requirements of Sections 856(c)(2) and (3) of the
Code determined as if the payment of such amount did not constitute Qualifying
Income or a subsequent letter from Purchaser's accountants revising that amount,
in which case the escrow agent shall release such amount to Purchaser; or (ii) a
letter from Purchaser's counsel indicating that Purchaser received a ruling from
the IRS holding that the receipt by Purchaser of the Section 12.2 Amount would
either constitute Qualifying Income or would be excluded from gross income
within the meaning of Sections 856(c)(2) and (3) of the Code (or alternatively,
Purchaser's legal counsel has rendered a legal opinion to the effect that the
receipt by Purchaser of the Section 12.2 Amount would either constitute
Qualifying Income or would be excluded from gross income within the meaning of
Sections 856(c)(2) and (3) of the Code), in which case the escrow agent shall
release the remainder of the Section 12.2 Amount to Purchaser. The escrow
agreement shall also provide that any portion of the Section 12.2 Amount held in
escrow for five years shall be released by the escrow agent to the Company. The
Company shall not be a party to such escrow agreement and shall not bear any
cost of or have liability resulting from the escrow agreement.
(c) Notwithstanding anything to the contrary set forth in
this Merger Agreement, in the event Purchaser is required to file suit to seek
all or a portion of the Termination Amount and Purchaser prevails in such
litigation, it shall be entitled to all expenses, including attorneys' fees and
expenses, which it has incurred in enforcing its rights hereunder.
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<PAGE>
Section 12.4 Payment to Company on Certain Termination.
-----------------------------------------
(a) In the event that (i) Purchaser or Sub are in material
breach of this Merger Agreement and the Offer or the Merger are not consummated;
or (ii) the Company terminates this Merger Agreement under Section 12.1(g),
Purchaser shall pay to the Company an amount in cash equal to $2,500,000 (the
"Damage Amount"). The parties to this Merger Agreement agree that in the event
Purchaser or Sub breaches this Merger Agreement, actual damages would be
difficult to determine and that the Damage Amount is a liquidated damage payment
in lieu of such actual damages. Payment of the Damage Amount shall be the
Company's sole and exclusive remedy for any material breach of this Merger
Agreement by Purchaser or Sub; provided, however, that the Company may elect to
seek remedies provided by Section 13.7 in which case the Company's sole and
exclusive remedy for any material breach of this Merger Agreement shall be as
provided by Section 13.7 and the Company will waive any and all rights to
collection of the Damage Amount.
(b) In the event that Purchaser is obligated to pay the
Company the Damage Amount pursuant to this Section 12.4, Purchaser shall pay to
the Company from the applicable Damage Amount deposited into escrow in
accordance with the next sentence, an amount equal to the lesser of (i) the
Damage Amount and (ii) the sum of (A) the maximum amount that can be paid to the
Company without causing the Company to fail to meet the requirements of Sections
856(c)(2) and (3) of the Code determined as if the payment of such amount did
not constitute Qualifying Income as determined by the Company's certified public
accountants, plus (B) in the event the Company receives either (1) a letter from
the Company's counsel indicating that the Company has received a ruling from the
IRS described in Section 12.4(c)(ii) or (2) an opinion from the Company's
counsel as described in Section 12.4(c)(ii), an amount equal to the Damage
Amount less the amount payable under clause (A) above. To secure Purchaser's
obligation to pay these amounts, Purchaser shall deposit into escrow an amount
in cash equal to the Damage Amount with an escrow agent selected by the Company
and on such terms (subject to Section 12.4(b)) as shall be agreed upon by the
Company and the escrow agent. The payment or deposit into escrow of the Damage
Amount pursuant to this Section 12.4(b) shall be made within three days of the
event which gives rise to the payment of the Damage Amount by wire transfer or
bank check.
(c) The escrow agreement shall provide that the Damage Amount
in escrow or any portion thereof shall not be released to the Company unless the
escrow agent receives any one or combination of the following: (i) a letter from
the Company's certified public accountants indicating the maximum amount that
can be paid by the escrow agent to the Company without causing the Company to
fail to meet the requirements of Section 856(C)(2) and (3) of the Code
determined as if the payment of such amount did not constitute Qualifying Income
or a subsequent letter from the Company's accountants revising that amount, in
which case the escrow agent shall release such amount to the Company; or (ii) a
letter from the Company's counsel indicating that the Company received a ruling
from the IRS holding that the receipt by the Company of the Damage Amount would
either constitute Qualifying Income or would be excluded from gross income
within the meaning of Sections 856(c)(2) and (3) of the Code (or alternatively,
the Company's legal counsel has rendered a legal opinion to the effect that the
receipt by the Company of the Damage Amount would either constitute Qualifying
Income or would be excluded from gross income within the
32
<PAGE>
meaning of Sections 856(c)(2) and (3) of the Code), in which case the escrow
agent shall release the remainder of the Damage Amount to Purchaser. The escrow
agreement shall also provide that any portion of the Damage Amount held in
escrow for five years shall be released by the escrow agent to Purchaser.
Purchaser shall not be a party to such escrow agreement and shall not bear any
cost of or have liability resulting from the escrow agreement.
(d) Notwithstanding anything to the contrary set forth in
this Merger Agreement, in the event the Company is required to file suit to seek
all or a portion of the Damage Amount and the Company prevails in such
litigation, it shall be entitled to all expenses, including attorneys' fees and
expenses, which it has incurred in enforcing its rights hereunder.
Section 12.5 Amendment. This Merger Agreement may be amended by the
---------
parties hereto, at any time before or after any required approval of matters
presented in connection with the Merger by the shareholders of the Company;
provided, however, that after any such approval, there shall not be made any
amendment that by law requires further approval by such shareholders without the
further approval of such shareholders. This Merger Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 12.6 Waiver. At any time prior to the Effective Date, the parties
------
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto; (b) waive any inaccuracies in the
representations and warranties contained herein or in any documents delivered
pursuant hereto; and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to the Merger
Agreement to assert any of its rights under the Merger Agreement or otherwise
shall not constitute a waiver of those rights.
ARTICLE XIII
General Provisions
Section 13.1 Non-Survival of Representations, Warranties and Agreements.
----------------------------------------------------------
Only those agreements and covenants of the parties which by their express terms
apply in whole or in part after the Effective Date (including, inter alia, the
agreements and covenants expressed in Article III and Sections 10.1, 10.3 and
10.4 and this Section 13.1) shall survive the Effective Date. All other
representations, warranties, agreements and covenants shall expire at the
Effective Date.
Section 13.2 Notices. All notices or other communications under this
-------
Merger Agreement shall be in writing and shall be given (and shall be deemed to
have been duly given upon receipt) by delivery in person, by cable, telegram,
telex or other standard form of
33
<PAGE>
telecommunications, or by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If to the Company:
Meridian Point Realty Trust VIII Co.
c/o RMB Realty Inc.
5400 LBJ Freeway, Suite 1470
Dallas, Texas 75240
Attention: Robert H. Gidel
Fax No.: (972) 982-8655
With a copy to:
Preuss Walker & Shanagher, LLP
595 Market Street
San Francisco, CA 94105
Attention: Denis F. Shanagher, Esq.
Fax No.: (415) 978-2613
If to Purchaser or Sub:
EastGroup Properties, Inc.
300 One Jackson Place
188 East Capitol Street
Jackson, Mississippi 39201
Attention: David H. Hoster II
President and Chief Executive Officer
Fax No.: (601) 352-1441
With a copy to:
Jaeckle Fleischmann & Mugel, LLP
800 Fleet Bank Building
Twelve Fountain Plaza
Buffalo, New York 14202
Attention: Joseph P. Kubarek, Esq.
Fax No.: (716) 856-0432
or to such other address as any party may have furnished to the other parties in
writing in accordance with this Section.
Section 13.3 Fees and Expenses. Whether or not the Merger is consummated,
-----------------
all costs and expenses incurred in connection with this Merger Agreement and the
transactions contemplated by this Merger Agreement shall be paid by the party
incurring such expenses.
34
<PAGE>
Section 13.4 Publicity. So long as this Merger Agreement is in effect,
---------
Purchaser, Sub and the Company agree to consult with each other in issuing any
press release or otherwise making any public statement with respect to the
Offer, the Merger and the transactions contemplated by this Merger Agreement,
and none of them shall issue any press release or make any public statement
prior to such consultation, except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange. The
commencement of litigation relating to this Merger Agreement or the transactions
contemplated hereby or any proceedings in connection therewith shall not be
deemed a violation of this Section 13.4.
Section 13.5 Interpretation. When a reference is made in this Merger
--------------
Agreement to subsidiaries of Purchaser or the Company, the word "subsidiaries"
means corporations more than 50% of whose outstanding voting securities are
directly or indirectly owned by Purchaser or the Company, as the case may be.
The headings contained in this Merger Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this Merger
Agreement.
Section 13.6 Miscellaneous. This Merger Agreement (including the
-------------
documents and instruments referred to herein) (a) constitutes the entire
agreement and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof; (b) except as provided in Sections 10.3 and 10.4, is not intended
to confer upon any other person any rights or remedies hereunder; (c) shall not
be assigned by operation of law or otherwise; and (d) shall be governed in all
respects, including validity, interpretation and effect, by the laws of the
State of Missouri (without giving effect to the provisions thereof relating to
conflicts of law). This Merger Agreement may be executed in two or more
counterparts which together shall constitute a single agreement.
Section 13.7 Specific Performance. The parties hereto agree that
--------------------
irreparable damage could occur to the Company in the event that any of the
provisions of this Merger Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
Company shall be entitled to an injunction or injunctions to prevent breaches of
this Merger Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction;
provided, however, that in the event the Company elects to collect or attempt to
collect the Damage Amount from Purchaser or Sub, payment of the Damage Amount
shall be the Company's sole and exclusive remedy for any material breach of this
Merger Agreement by Purchaser or Sub.
35
<PAGE>
IN WITNESS WHEREOF, Purchaser, Sub and the Company have caused this Merger
Agreement to be signed by their respective officers thereunder duly authorized
all as of the date first written above.
EASTGROUP PROPERTIES, INC.
By: /s/ David H. Hoster II
--------------------------------
Name: David H. Hoster II
Title: President
EASTGROUP-MERIDIAN, INC.
By: /s/ David H. Hoster II
--------------------------------
Name: David H. Hoster II
Title: President
MERIDIAN POINT REALTY TRUST VIII CO.
By: /s/ Robert H. Gidel
--------------------------------
Name: Robert H. Gidel
Title: Chief Executive Officer
36
<PAGE>
EXHIBIT A
CONDITIONS OF THE OFFER
-----------------------
Notwithstanding any other term of the Offer or this Merger Agreement,
Sub shall not be required to accept for payment or, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Company Common
Shares or Company Preferred Shares after the termination or withdrawal of the
Offer), to pay for any Company Common Shares or Company Preferred Shares
tendered pursuant to the Offer unless, (i) there shall have been validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Company Common Shares and Company Preferred Shares that, when added to Company
Preferred Shares beneficially owned by Purchaser on the date hereof, will
constitute two-thirds of the total number of shares of the capital stock of the
Company entitled to vote on a merger under the Company's Certificate and the
GBCL (the "Minimum Condition"); and (ii) any waiting period under the HSR Act
applicable to the purchase of Company Common Shares and Company Preferred Shares
pursuant to the Offer shall have expired or been terminated (the "HSR
Condition"). Furthermore, notwithstanding any other term of the Offer or this
Merger Agreement, Sub shall not be required to accept for payment or, subject as
aforesaid, to pay for any Company Common Shares and Company Preferred Shares not
theretofore accepted for payment or paid for, and may terminate the Offer if, at
any time on or after the date of this Merger Agreement and before the acceptance
of such shares for payment or the payment therefor, any of the following
conditions exist (other than as a result of any action or inaction of Purchaser
or any of its subsidiaries which constitutes a breach of this Merger Agreement):
(a) there shall be threatened or pending by any governmental entity
any suit, action or proceeding, (i) challenging the acquisition by Purchaser or
Sub of any Company Common Shares or Company Preferred Shares under the Offer,
seeking to restrain or prohibit the making or consummation of the Offer or the
Merger or the performance of any of the other transactions contemplated by this
Merger Agreement, or seeking to obtain from the Company, Purchaser or Sub any
damages that are material in relation to the Company and its subsidiaries taken
as a whole; (ii) seeking to prohibit or limit the ownership or operation by the
Company, Purchaser or any of their respective subsidiaries of a material portion
of the business or assets of the Company and its subsidiaries, taken as a whole,
or Purchaser and its subsidiaries, taken as a whole, or to compel the Company or
Purchaser to dispose of or hold separate any material portion of the business or
assets of the Company and its subsidiaries, taken as a whole, or Purchaser and
its subsidiaries, taken as a whole, as a result of the Offer or any of the other
transactions contemplated by this Merger Agreement; (iii) seeking to impose
material limitations on the ability of Purchaser or Sub to acquire or
A-1
<PAGE>
hold, or exercise full rights of ownership of, any Company Common Shares or
Company Preferred Shares accepted for payment pursuant to the Offer including,
without limitation, the right to vote such Company Common Shares and Company
Preferred Shares on all matters properly presented to the shareholders of the
Company; (iv) seeking to prohibit Purchaser or any of its subsidiaries from
effectively controlling in any material respect the business or operations of
the Company and its subsidiaries, taken as a whole; or (v) which otherwise is
reasonably likely to have a material adverse effect on the business, financial
condition or results of operations of the Company and its subsidiaries, taken as
a whole;
(b) there shall be any statute, rules, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any other action shall be taken by any governmental
entity or court, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(c) (i) the Board of Trustees of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Purchaser or Sub its
approval or recommendation of the Offer, the Merger or this Merger Agreement, or
approved or recommended any takeover proposal or (ii) the Company shall have
entered into any agreement with respect to any Acquisition Proposal in
accordance with Section 10.6 of this Merger Agreement;
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities exchange
or in the over-the-counter market in the United States (excluding any
coordinated trading halt triggered solely as a result of a specified decrease in
a market index); (ii) any extraordinary or material adverse change in the
financial market or major stock exchange indices in the United States; (iii) any
material adverse change in United States currency exchange rates or a suspension
of, or limitation on, the markets therefor; (iv) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States; (v) any limitation (whether or not mandatory) by any governmental entity
on, or other event that might materially affect, the extension of credit by
banks or other lending institutions; or (vi) in the case of any of the foregoing
existing on the date of this Merger Agreement, a material acceleration or
worsening thereof;
(e) any of the representations and warranties of the Company set
forth in this Merger Agreement that are qualified as to materiality shall not be
true and correct and any such representations and warranties that are not so
qualified shall not be true and correct in any material respect, in each case as
of the date of this Merger Agreement and as of the scheduled expiration of the
Offer;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under this Merger Agreement;
A-2
<PAGE>
(g) the Merger Agreement shall have been terminated in accordance
with its terms.
The foregoing conditions are for the sole benefit of Sub and Purchaser
and may, subject to the terms of the Merger Agreement, be waived by Sub and
Purchaser in whole or in part at any time and from time to time in their sole
discretion. The failure by Purchaser or Sub at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
A-3
<PAGE>
[LETTERHEAD OF MERIDIAN POINT REALTY TRUST VIII COMPANY APPEARS HERE]
EXHIBIT (c)(2)
February 10, 1998
David H. Hoster II
President and Chief Executive Officer
EASTGROUP PROPERTIES INC.
300 One Jackson Place
188 East Capitol Street
Jackson, MS 39201-2195
Re: EastGroup Offer to Merge
Dear Mr. Hoster:
EastGroup Properties Inc. ("you" or "your") has requested information
regarding Meridian Point Realty Trust VIII, (the "Company,") in connection with
your consideration of the possible investment in or acquisition of all or part
of the assets or equity of the Company (a "Possible Transaction"). In
consideration of the Company furnishing you with the Evaluation Materials (as
defined below) you agree as follows:
Confidentiality of Evaluation Materials
- ---------------------------------------
You will treat confidentially any information (whether written or oral)
that either the Company or its representatives furnish to you in connection with
a Possible Transaction involving the Company, together with analyses,
compilations, studies or other documents prepared by you, or by your
representatives (as defined below) which contain or otherwise reflect such
information or your review of, or interest in, the Company (collectively, the
"Evaluation Materials"). You recognize and acknowledge the confidential and
non-public nature of the Evaluation Materials, the competitive value of the
Evaluation Materials, and the damage that could result to the Company if the
Evaluation Materials were used or disclosed except as authorized by this
Agreement.
The term "Evaluation Materials" includes information furnished to you
orally or in writing (whatever the form or storage medium) or gathered by
inspection regarding the Company, and regardless of whether such information is
specifically identified as "confidential". The term "Evaluation Materials" does
not include information which (i) is or becomes generally available to the
public other
<PAGE>
David H. Hoster II
February 10, 1998
Page 2
than as a result of a disclosure by you or your representatives, (ii) was or
becomes available to you on a non-confidential basis from a source other than
the Company or its representatives, provided that such source is not prohibited
from disclosing such information to you by a contractual, legal or fiduciary
obligation to the Company or its representatives, or (iii) is independently
developed by you.
Use of Evaluation Materials
- ---------------------------
You will not use any of the Evaluation Materials for any purpose other than
the exclusive purpose of evaluating a Possible Transaction. You and your
representatives will keep the Evaluation Materials completely confidential;
provided, however, that (i) any of such information may only be disclosed to
- -----------------
those of your directors, officers, employees, agents, representatives (including
attorneys, accountants and financial advisors), lenders and other sources of
financing (collectively, "your representatives") who need to know such
information for the purpose of evaluating a Possible Transaction between you and
the Company (it being understood that your representatives shall be informed by
you of the confidential nature of such information and shall be directed by you,
and shall each expressly agree, to treat such information confidentially in
accordance with this Agreement), (ii) you may disclose Evaluation Materials that
you have been advised by counsel are required to be disclosed under applicable
securities laws; and (iii) any other disclosure of such information may only be
made if the Company consents in writing prior to any such disclosure. Without
limiting the generality of the foregoing, in the event that a Possible
Transaction is not consummated neither you nor your representatives shall use
any of the Evaluation Materials for any purpose. You will be responsible for any
breach of this Agreement by your representatives.
Other than with respect to those Evaluation Materials you have been advised
by counsel are required to be disclosed under applicable securities laws, in the
event that you or any of your representatives receive a request or are required
(by deposition, interrogatory, request for documents, subpoena,
civil investigative demand or similar process) to disclose all or any part of
the Evaluation Materials, you or your representatives, as the case may be, agree
to (i) immediately notify the Company of the existence, terms and circumstances
surrounding such a request, (ii) consult with the Company on the advisability of
taking legally available steps to resist or narrow such request and (iii) assist
the Company in seeking a protective order or other appropriate remedy. In the
event that such
<PAGE>
David H. Hoster II
February 10, 1998
Page 3
protective order or other remedy is not obtained or that the Company waives
compliance with the provisions hereof, (i) you or your representatives, as the
case may be, may disclose to any tribunal only that portion of the Evaluation
Materials which you are advised by counsel is legally required to be disclosed,
and shall exercise your best efforts to obtain assurance that confidential
treatment will be accorded such Evaluation Materials and (ii) you shall not be
liable for such disclosure unless disclosure to any such tribunal was caused by
or resulted from a previous disclosure by you or your representatives not
permitted by this Agreement.
Non-Disclosure
- --------------
The disclosure of your access to the Evaluation Materials at this time
could have a material adverse effect on the Company's business and the pursuit
of its strategic alternatives if for any reason a Possible Transaction is not
consummated. Accordingly, unless required by applicable law, including
applicable securities laws that counsel has advised you require disclosure of
Evaluation Materials, you agree that without the prior written consent of the
Company, you will not, and you will direct your representatives not to, disclose
to any person either the fact that you have been provided access to the
Evaluation Materials or that discussions or negotiations are taking place
concerning a Possible Transaction between you and the Company as a result
thereof, or any of the terms, conditions or other facts with respect to any such
Possible Transaction, including the status thereof. The term "person" as used in
this letter shall be broadly interpreted to include, without limitation, any
corporation, the Company, governmental agency or body, stock exchange,
partnership, association or individual.
Return of Documents
- -------------------
Upon the Company's request, you shall promptly deliver to the Company or
destroy all written Evaluation Materials and any other written materials without
retaining, in whole or in part, any copies, extracts or other reproductions
(whatever the form or storage medium) of such materials, and shall certify the
destruction of such materials in writing to the Company.
<PAGE>
David H. Hoster II
February 10, 1998
Page 4
No Unauthorized Contact or Solicitation
- ---------------------------------------
During the course of your evaluation, all inquiries and other
communications are to be made directly to employees or representatives of the
Company as specified by the Company. You also agree not to discuss with or
offer to any third party an equity participation in a Possible Transaction or
any other form of joint acquisition by you and such third party that involves
use of the Evaluation Materials without the Company's prior written consent.
No Representation or Warranty
- -----------------------------
Although the Company has endeavored to include in the Evaluation Materials
information which it believes to be relevant for the purpose of your
investigation, you acknowledge and agree that none of the Company or the
Company's representatives or agents is making any representation or warranty,
expressed or implied, as to the accuracy or completeness of the Evaluation
Materials, and none of the Company or the Company's other representatives or
agents, nor any of their respective officers, directors, employees,
representatives, stockholders, owners, affiliates, advisors or agents, will have
any liability to you or any other person resulting from the use of Evaluation
Materials by you or any of your representatives. Only those representations or
warranties that are made to you in a formal written agreement involving your
investment in or acquisition of all or part of the assets or equity of the
Company, when, as, and if it is executed, and subject to such limitations and
restrictions as may be specified in such agreement, will have any legal effect.
You also acknowledge and agree that no contract or agreement shall be
deemed to exist between you and the Company unless and until a formal written
agreement has been executed and delivered by you and each of the other parties
thereto, and you hereby waive, in advance, any claims (including, without
limitation, breach of contract) in connection with a Possible Transaction unless
and until a formal written agreement has been executed and delivered by you and
each of the other parties thereto; provided, however, that nothing herein shall
be deemed a waiver or release of any claim or action that you may have as a
shareholder of the Company, based upon your status as a shareholder. You also
agree that unless and until a formal written agreement between the Company and
you with respect to a Possible Transaction has been executed and delivered by
you and each of the other parties thereto, there shall not be any legal
obligation of any kind whatsoever with respect to any such transaction by virtue
of this Agreement or any other written or oral expression with respect to such
transaction except, in
<PAGE>
David H. Hoster II
February 10, 1998
Page 5
the case of this Agreement, for the matters specifically agreed to herein. For
purposes of this Agreement, the term "formal written agreement" does not include
an executed letter of intent or any other preliminary written agreement, nor
does it include any oral acceptance of an offer or bid by you.
You further understand and agree that (i) the Company shall be free to
conduct the process for a Possible Transaction as it in its sole discretion
shall determine (including, without limitation, negotiating with any prospective
interested parties and entering into a formal agreement without prior notice to
you or to any other person), (ii) any procedures relating to such Possible
Transaction may be changed at any time without notice to you or any other person
and (iii) unless and until a formal written agreement concerning the Possible
Transaction has been executed, neither the Company or any of its directors,
officers, employees, stockholders, owners, affiliates, agents or representatives
will have any liability to you with respect to the Possible Transaction, whether
by virtue of this letter agreement, any other written or oral expression
regarding a Possible Transaction or otherwise.
Legal Remedy
- ------------
You understand and agree that money damages would not be a sufficient
remedy for any breach of this Agreement by you or your representatives and that
the Company will be entitled to specific performance and injunctive relief as
remedies for any such breach. Such remedies shall not be deemed to be the
exclusive remedies for a breach of this Agreement by your or your
representatives but shall be in addition to all other remedies available at law
or equity provided however any suit for damages shall be specifically limited to
actual provable damages, and Company hereby waives any and all rights to seek
consequential, punitive, treble or other compensatory damages of any types or
kind.
Other
- -----
This Agreement constitutes the entire agreement between the parties
hereto regarding the subject matter hereof. This Agreement may be changed only
by a written agreement signed by the parties hereto or their authorized
representatives.
This Agreement shall be governed and construed in accordance with the
laws of the State of California, without regard to the conflicts of law
principles thereof.
<PAGE>
David H. Hoster II
February 10, 1998
Page 6
If you are in agreement within the foregoing, please sign and return one
copy of this letter, it being understood that all counterpart copies will
constitute but one agreement with respect to the subject matter of this letter.
Very truly yours,
MERIDIAN POINT REALTY TRUST VIII
By: /s/ Robert H. Gidel
------------------------------------
Robert H. Gidel
Chief Executive Officer
Accepted and Agreed:
EASTGROUP PROPERTIES INC.
By: /s/ David H. Hoster II
------------------------------------
David H. Hoster II
President and Chief Executive Officer
<PAGE>
EXHIBIT (c)(3)
February 19, 1998
PaineWebber Incorporated
1285 Avenue of the Americas
New York, NY 10019
Ladies and Gentlemen:
EastGroup-Meridian, Inc., a Missouri corporation (the "Purchaser"), and a
wholly-owned subsidiary of EastGroup Properties, Inc., a Maryland corporation
(the "Parent"), proposes to make an offer to purchase (together with any
extensions or amendments thereof or supplements thereto, the "Tender Offer") all
of the issued and outstanding common and preferred shares (collectively, the
"Securities") of Meridian Point Realty Trust VIII Company (the "Subject
Company"). The making of the Tender Offer, the purchase of Securities pursuant
thereto, and all related incidental acts and transactions are hereinafter
referred to collectively as the "Tender Offer Transactions." The following sets
forth the agreement (the "Agreement") between the Purchaser and the Parent and
PaineWebber Incorporated ("PaineWebber"):
1. Appointment as Dealer Manager. The Purchaser and the Parent hereby
-----------------------------
appoint PaineWebber on an exclusive basis to act as financial advisor with
respect to the Tender Offer Transactions and as sole dealer manager for the
Tender Offer, and hereby authorize PaineWebber to act as such in connection
therewith. PaineWebber agrees to perform those services as dealer manager with
respect to the Tender Offer as are customarily performed by PaineWebber in
connection with tender offers of a like nature and which the Purchaser and
Parent specifically request PaineWebber to perform, including (but not limited
to) using its best efforts to solicit tenders of Securities pursuant to the
Tender Offer and in communicating with other brokers, dealers, commercial banks
and trust companies (collectively, "Dealers"). In soliciting or obtaining
tenders, (i) PaineWebber, as dealer manager, shall not be deemed to be acting as
the agent of the Purchaser or the Parent other than pursuant to this Agreement
or as the agent of any Dealer and (ii) no Dealer shall be deemed to be acting as
the agent of PaineWebber. It is understood that PaineWebber is being engaged
hereunder solely to provide the services described above on behalf of the
Purchaser and the Parent, and that PaineWebber is not acting as an agent of the
equity holders of the Purchaser or the Parent, or as a fiduciary of the
Purchaser, the Parent or their respective equity holders, and that PaineWebber
shall have no duties or liability to the equityholders of the Purchaser or the
Parent or any other third party in connection with its engagement hereunder, all
of which are hereby expressly waived.
-1-
<PAGE>
2. Tender Offer Materials. As soon as practicable following the
----------------------
commencement of the Tender Offer, but in no event later than required by
applicable law, the Purchaser will file with the Securities and Exchange
Commission (the "Commission") a statement on Schedule 14D-1 with respect to the
Tender Offer and will promptly file as required any and all necessary amendments
and supplements to such statement on Schedule 14D-1. Such statement, as amended
from time to time, and the several exhibits thereto, are hereinafter referred to
as the "Schedule." The Schedule, the offer to purchase and letter of transmittal
contained therein, and all other statements and documents filed or to be filed
with any federal, state or local regulatory authority and all other documents
(including advertisements and other communications) that the Purchaser or the
Parent authorizes for use in connection with the solicitation of tenders for the
Securities, in each case as amended or supplemented from time to time, are
hereinafter referred to as the "Tender Offer Documents." The Purchaser and the
Parent agree to furnish PaineWebber, at their expense, with as many copies as
PaineWebber may request of the offer to purchase, the letter of transmittal, and
any other Tender Offer Document that PaineWebber may reasonably request. The
Purchaser and the Parent represent to PaineWebber that the Tender Offer
Documents are, and at all times during the Tender Offer (as from time to time
amended or supplemented), will comply as to form in all material respects with
all applicable rules and regulations, including, without limitation, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations thereunder, and that none of the Tender Offer Documents contains
or will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made with respect to any statements
contained in the Tender Offer Documents in reliance upon and in conformity with
information relating to PaineWebber furnished in writing by PaineWebber
expressly for use therein.
The Purchaser and the Parent agree that, a reasonable time prior to using
any material in connection with the Tender Offer or filing any such material
with the Commission or any other federal or state agency, commission or
instrumentality (collectively, "Other Agencies"), the Purchaser will submit
copies of such material to PaineWebber and will consult with PaineWebber and
give reasonable consideration to its comments, if any, with respect thereto.
3. Withdrawal. If the Purchaser or the Parent uses or permits the use of
----------
any material in connection with the Tender Offer or files any such material with
the Commission or Other Agencies (i) that has not been submitted to PaineWebber
for its comments, (ii) that has been so submitted and with respect to which
PaineWebber made comments to the Purchaser or the Parent but which comments have
not been reflected to PaineWebber's reasonable satisfaction, or (iii) if
Purchaser or Parent breach any of their respective representations, warranties
or covenants set forth herein, then PaineWebber shall be entitled to withdraw as
dealer manager in connection with the Tender Offer without any liability or
penalty or loss of rights on the part of PaineWebber or any other person or
entity defined in paragraph 6 hereof as an "Indemnified Person," and PaineWebber
shall remain entitled to receive the payment of all fees and expenses payable
under this Agreement that have accrued to the date of any such withdrawal.
4. Compensation. The Purchaser and the Parent will jointly and severally
------------
pay PaineWebber for services to be rendered by PaineWebber hereunder as set
forth in the
-2-
<PAGE>
compensation provisions of the Agreement dated February 19, 1998 between the
Parent and PaineWebber (the "Engagement Agreement"), which compensation
provisions are incorporated herein as if restated herein in full and shall
remain as a part of this Agreement notwithstanding any termination, amendment or
purported invalidity of the Engagement Agreement.
5. Expenses; Reimbursement Thereof. The Purchaser and/or the Parent will
-------------------------------
pay or cause to be paid (i) all fees and expenses relating to the preparation,
printing, filing, mailing and publishing of all documents pertaining to the
Tender Offer; (ii) all fees and expenses of any depositary, information agent or
other agents, attorneys and other persons retained by the Purchaser in
connection with the Tender Offer; (iii) all fees, if any, payable to Dealers
(including PaineWebber) as reimbursement for their customary mailing and
handling expenses in forwarding materials related to the Tender Offer to their
customers; (iv) all advertising charges; and (v) all other fees and expenses
incurred in connection with or relating to the Tender Offer. In addition, the
Purchaser and the Parent, jointly and severally, agree to reimburse PaineWebber
and its affiliates, promptly upon request, for all out-of-pocket expenses,
including (without limiting the foregoing) the fees, costs and expenses of
PaineWebber's legal counsel, incurred in connection with the Tender Offer
Transactions.
6. Limitation on Liability. Neither PaineWebber nor any affiliate
-----------------------
thereof shall have any liability to the Purchaser or the Parent or any affiliate
thereof for any losses, claims, damages, liabilities or expenses ("Liabilities")
arising from any act or omission on the part of any Dealer, or from
PaineWebber's acts or omissions in performing its obligations hereunder or
otherwise in connection with the Tender Offer Transactions, except to the extent
that such Liabilities are finally judicially determined by a court of competent
jurisdiction to have resulted primarily from PaineWebber's willful misconduct or
gross negligence.
7. Indemnification and Contribution. The Purchaser and the Parent,
--------------------------------
jointly and severally, hereby agree (i) to indemnify and hold harmless
PaineWebber, its affiliated companies, and each of PaineWebber's and such
affiliated companies' respective officers, directors, agents, employees and
controlling persons (within the meaning of Section 20 of the Securities Exchange
Act of 1934 and Section 15 of the Securities Act of 1933) (each of the
foregoing, including PaineWebber, being hereafter sometimes called an
"Indemnified Person"), to the fullest extent permitted by law from and against
any and all Liabilities, actions (including shareholder derivative actions),
proceedings, investigations (whether formal or informal) or inquiries, or
threats thereof, based on or arising out of (1) any untrue statement or alleged
untrue statement of any material fact in any Tender Offer Document, (2) any
omission or alleged omission of any material fact required to be stated in any
Tender Offer Document or necessary to make the statements made in any Tender
Offer Document, in light of the circumstances under which they were made, not
misleading, (3) any withdrawal, termination or cancellation of any one or more
of the Tender Offer Transactions for any reason whatsoever, (4) any tender,
purchase or other acquisition by the Purchaser or the Parent or any affiliate
thereof of Securities (including, without limiting the foregoing, any purchase
prior to the date hereof as to which PaineWebber acted as broker or dealer), (5)
any violation by or conflict of the Tender Offer or any of the Tender Offer
Transactions of or with any law, rule, regulation, order, award, judgment,
determination, writ, injunction or decree of any United States federal, state,
local or foreign court or governmental authority, (6) any breach by the
Purchaser or the Parent of any
-3-
<PAGE>
representation or warranty or any failure to comply with any of the agreements
contained herein or any agreements relating to the Tender Offer or the Tender
Offer transactions, or (7) the Tender Offer, the Tender Offer Transactions or
PaineWebber's engagement hereunder, and (ii) in connection with the foregoing
obligations, to reimburse each Indemnified Person for all expenses (including
fees, disbursements and other charges of counsel) as they are incurred by such
Indemnified Person in connection with investigating, preparing to defend or
defending any such action (including actions brought by us or our equity holders
or derivative actions brought by any person claiming through us or in our name),
proceeding, investigation or inquiry, or threat thereof, whether or not any such
action, proceeding, investigation or inquiry is actually or formally commenced
or any such Indemnified Person is a party thereto or subject thereof.
Notwithstanding the foregoing, the Purchaser and the Parent shall not be
obligated to indemnify any such Indemnified Person under this Section 6 with
respect to any Liability, and amounts paid in reimbursement of expenses under
this Section 6 shall be refunded, to the extent, but only to the extent, that it
is finally judicially determined (i) that such Liability resulted primarily from
an untrue statement of any material fact in any Tender Offer Document or any
omission to state any material fact required to be stated in any Tender Offer
Document, or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading, if, in any such case,
such statement or omission was made in such Tender Offer Document in reliance
upon and in conformity with written information prepared by PaineWebber and
furnished to the Purchaser or Parent in writing by PaineWebber or (ii) in the
case of Liabilities against which Indemnified Persons are indemnified solely
under clause (i)(7) of the preceding sentence, that such Liability resulted
primarily from the willful misconduct or gross negligence of such Indemnified
Person.
If any litigation, proceeding or investigation is instituted or threatened
against any Indemnified Person in respect of which indemnity may be sought
against the Purchaser pursuant to this Section 6, such Indemnified Person shall
promptly notify the Purchaser or Parent thereof, but the omission so to notify
the Purchaser or Parent shall not relieve the Purchaser or the Parent from any
obligation or liability under this Section 6, unless, and only to the extent
that, such omission so to notify results in the loss of substantive rights or
defenses. If any such litigation or proceeding shall be brought against any
Indemnified Person, the Purchaser and/or the Parent shall be entitled to
participate in such litigation or proceeding, and, after written notice from the
Purchaser or Parent to such Indemnified Person, to assume the defense of such
litigation or proceeding with counsel of the Purchaser's or Parent's choice at
its expense; provided, however, that such counsel shall be reasonably
-------- -------
satisfactory to the Indemnified Person. Notwithstanding the election of the
Purchaser or the Parent to assume the defense of such litigation or proceeding,
such Indemnified Person shall have the right to employ separate counsel and to
control its own defense of such litigation or proceeding, and the Purchaser and
the Parent, jointly and severally, shall bear the fees and disbursements of such
separate counsel, if, in the reasonable opinion of counsel to such Indemnified
Person, (i) there may be legal defenses available to such Indemnified Person or
to other Indemnified Persons that are different from or additional to those
available to the Purchaser or the Parent or (ii) a conflict or potential
conflict otherwise exists between such Indemnified Person and the Purchaser or
the Parent that would make such separate representation advisable; provided,
--------
however, that the Purchaser and the Parent shall not under any circumstances be
- -------
liable hereunder for the expenses of more than one firm of attorneys in any
jurisdiction in any one legal action or
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<PAGE>
group of related legal actions. The Purchaser and the Parent agree that they
will not, without the prior written consent of PaineWebber, settle or compromise
or consent to the entry of any judgment in any pending or threatened claim,
action or proceeding relating to the Tender Offer Transactions or PaineWebber's
engagement hereunder (whether or not any Indemnified Person is a party thereto)
unless such settlement, compromise or consent includes an unconditional release
of PaineWebber and each other Indemnified Person from all liability arising or
that may arise out of such claim, action or proceeding.
If the indemnification provided for in this Section 6 is held by a court
of competent jurisdiction to be unavailable to any Indemnified Person in respect
of any Liabilities referred to herein (other than as a consequence of a final
judicial determination as set forth in the second sentence of the first
paragraph of this Section 6), then the Purchaser and the Parent in lieu of
indemnifying such Indemnified Person, shall, jointly and severally, contribute
to the amount paid or payable by such Indemnified Person as a result of such
Liabilities in such proportion as is appropriate to reflect the relative
benefits received by the Purchaser and the Parent on the one hand and by such
Indemnified Person on the other from the Tender Offer Transactions. If the
allocation provided in the preceding sentence is not permitted by applicable
law, or as a consequence of a final judicial determination as set forth in the
second sentence of the first paragraph of this Section 6, then the Purchaser and
the Parent agree to contribute to the amount paid or payable by such Indemnified
Person as a result of such Liabilities in such proportion as is appropriate to
reflect not only the relative benefits referred to in the preceding sentence,
but also the relative fault of the Purchaser and the Parent on the one hand and
of such Indemnified Person on the other in connection with the statements or
omissions or other actions relating to or in connection with the Tender Offer
Transactions or PaineWebber's engagement hereunder that resulted in such
Liabilities. Notwithstanding the foregoing, in no event shall the aggregate
amount contributed by the Indemnified Persons taking into account the
contribution of Purchaser and Parent as described above exceed the amount of
fees actually paid to PaineWebber by Purchaser and Parent pursuant to this
Agreement in connection with the Tender Offer Transactions. The relative
benefits received by the Purchaser and Parent on the one hand and PaineWebber on
the other shall be deemed to be in the same proportion as (i) the aggregate
purchase price paid or proposed to be paid for the maximum number of Securities
offered to be purchased pursuant to the Tender Offer bears to (ii) the fees paid
to PaineWebber pursuant to this Agreement. The relative fault of the Purchaser
and Parent on the one hand and of PaineWebber on the other shall be determined
by reference to, among other things, whether any untrue or alleged untrue
statement of, or any omission or alleged omission to state, a material fact
relates to information supplied by the Purchaser or the Parent or by PaineWebber
and by reference to the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The foregoing indemnification and contribution agreement shall be in addition to
any rights that any Indemnified Person may have at common law, by separate
agreement or otherwise.
7. Representations, Warranties and Covenants. The Purchaser and the
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Parent, jointly and severally, represent and warrant to, and covenant with,
PaineWebber that:
(i) each of the Purchaser and Parent is a corporation duly organized
and validly existing in good standing under the laws of the
jurisdiction of its incorporation;
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<PAGE>
(ii) each of the Purchaser and Parent have taken all necessary corporate
action to authorize the Tender Offer;
(iii) this Agreement has been duly authorized, executed and delivered by,
and is a legal, valid and binding agreement of, each of the
Purchaser and Parent and is enforceable against the Purchaser and
Parent in accordance with its terms;
(iv) the Tender Offer Transactions, and the actions of Purchaser and
Parent with respect thereto, comply and will comply in all material
respects with all applicable requirements of law, including without
limitation all federal securities laws, the corporate laws of the
state in which the Subject Company is incorporated and any
applicable state takeover or "blue sky" laws;
(v) neither the Purchaser or Parent nor any of their affiliates has any
knowledge of any material fact or information concerning the
Subject Company that is required to be disclosed to the public as a
condition to the purchase of Securities and that has not been, or
is not being, or will not be, disclosed to the public through the
Tender Offer Documents or otherwise; and
(vi) neither the Purchaser nor Parent nor any affiliate thereof shall
publicly disclose or refer to any opinion or advice rendered by
PaineWebber to the Company without PaineWebber's prior written
consent.
8. Certain Events. The Purchaser will advise PaineWebber promptly of (i)
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the occurrence of any event which might reasonably cause the Purchaser to
withdraw, rescind or terminate the Tender Offer, or which might reasonably
permit the Purchaser to exercise any right not to purchase Securities tendered
pursuant to the Tender Offer or to consummate the transactions contemplated in
the Offer to Purchase, (ii) any material information relating to the Tender
Offer, including, without limitation, any proposal or requirement to make, amend
or supplement any filing required by the Exchange Act, (iii) the issuance of any
comment or order or the taking of any other action by the Commission or any
Other Agency concerning the Tender Offer, and (iv) any other information
relating to the Tender Offer or the transactions contemplated in the Offer to
Purchase which PaineWebber may from time to time reasonably request.
9. Securityholder Information. The Purchaser and the Parent will cause
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PaineWebber to be provided, to the extent the same is available to the Purchaser
and the Parent, with any cards or lists showing the names and addresses of, and
the number of Securities held by, the holders of Securities as of a recent date
and will endeavor to cause PaineWebber to be advised from day to day during the
period of the Tender Offer as to any transfers of record of the Securities known
to the Purchaser and the Parent.
The Purchaser and the Parent have appointed The Harris Trust Company of
New York to serve as Depositary in connection with the Tender Offer and have
instructed the Depositary to advise you daily as to such matters as you may
reasonably request.
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<PAGE>
10. Miscellaneous. This Agreement shall be governed by and construed in
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accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely in such state.
The Purchaser and the Parent, by their execution of this Agreement, each
hereby consents to the jurisdiction of the courts of, and consents to be sued in
any court in, the County of New York of the State of New York or in the United
States District Court for the Southern District of New York in any action or
proceeding brought by PaineWebber or any other Indemnified Person under this
Agreement. Service of process on the Purchaser or Parent may be effected by
mailing process, by registered mail, return receipt requested, to the Purchaser
or Parent at 300 One Jackson Place, 188 East Capitol Street, Jackson,
Mississippi 39201-2195.
The Purchaser, the Parent and PaineWebber each hereby irrevocably waive
any right they may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby.
The agreements contained in Sections 3, 5 and 6 and the representations
and warranties contained in Sections 2 and 7 shall remain operative and in full
force regardless of (i) any failure to commence, or the withdrawal, termination
or consummation of, the Tender Offer, (ii) any investigation made by or on
behalf of any Indemnified Person, (iii) any withdrawal by PaineWebber as dealer
manager for the Tender Offer pursuant to Section 2 or otherwise or (iv) any
termination of this Agreement.
Simultaneously with the execution and delivery of this Agreement, the
Purchaser and the Parent shall deliver to you the opinion of Jaeckle,
Fleischmann & Mugel, counsel for the Purchaser and the Parent, in the form
attached hereto as Exhibit A.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto, and the respective successors and permitted assigns of each, and
shall inure to the benefit of the parties hereto and the other Indemnified
Persons, and the respective successors and permitted assigns of the foregoing.
If any provision of this Agreement shall be determined to be invalid or
unenforceable in any respect, such determination shall not affect such provision
in any other respect or any other provision of this Agreement, which shall
remain in full force and effect. This Agreement may not be amended or otherwise
modified or waived except by an instrument in writing signed by both
PaineWebber, the Purchaser and Parent.
This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which together shall be considered a single
instrument.
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<PAGE>
The Engagement Agreement shall remain operative and in full force. Except
as set forth in the preceding sentence, this Agreement sets forth our entire
agreement with you with respect to the subject matter hereof, and supersedes any
prior agreements or understandings (whether written or oral) between us with
respect thereto.
Please confirm that the foregoing is in accordance with your understanding
by signing and returning to us the enclosed copy of this letter.
Very truly yours,
EASTGROUP-MERIDIAN, INC.
By
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Name:
Title:
EASTGROUP PROPERTIES, INC.
By
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Name:
Title:
Accepted and Agreed to as of
the date first written above:
PAINEWEBBER INCORPORATED
By:
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Title:
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